Having poor or limited credit can be frustrating, and many consumers find themselves asking “what can I do to improve my credit score?” While credit repair can take some time and dedication, it is possible, and you can often do it without spending lots of money right off the bat. We’re going to look at some of the leading ways to boost your credit score and clean up your credit report in general.
Your payment history accounts for approximately 30% of your overall credit score, which makes late payments one of the most damaging to your credit. Even if you’ve had late payments in the past, commit to paying on time, every time, going forward. If you do happen to miss a payment by 30 days, contact your creditor to see if they’ll stop reporting it as late if you catch up. Even if they don’t agree, get your account current and try to maintain on-time payments.
A few minor errors or inaccuracies in your credit report can drag your score down considerably. Disputes are free and can be a quick and easy way to give your credit score a boost. Every consumer is entitled to a free copy of their credit report from each reporting bureau annually, make sure you get your report and verify that there are zero errors. Additionally, apps like Credit Karma can help you monitor your credit in real-time, and file disputes with a few taps.
Paying down debt is important, but paying it down wisely is crucial. Each month your creditors will report your balances to the bureaus, and if you’re paying after that date, you won’t see the full effects of your payment for another month. Make your payments just before they report, so your payment reflects before the billing cycle is officially over.
Asking your creditors for higher credit limits may sound counterintuitive to improving your credit, but it can help. Part of your credit score is determined by your credit utilization ratio. If you have a credit card with a $1,000 limit, and you have a balance of $500 on it, you have a utilization rate of 50%. If your creditor grants you a limit increase to $2,000 and you don’t incur any more debt, your utilization drops to just 25%. Ideal utilization rates are 30% or less.
Getting a secured credit card can help build credit if used responsibly, and you can usually get one even with bad credit. Your limit will only be equal to the deposit you use to secure the account, but after a while, your creditor may increase your limit or offer you an unsecured alternative.
Another factor that impacts your credit is the mix of different credit accounts you have. Ideally, you want a varied mix of credit, such as revolving credit like credit cards, installment loans, auto loans, and mortgages. If you are missing one or more types, try to fill in the gaps. For example, if all you have are credit cards, ditch one of the cards and try a personal loan to change your account mix.
Rebuilding your credit can take some time, and even if you’re making good progress you may still have an emergency that creates an urgent need for fast cash. If you’ve recently said “I’m working to improve my credit score, but I need money now,” reach out to Lending Bear for fast cash options.