7 Ways to Improve Your Credit Score Fast
The benefits of having a good credit score are many: you can borrow money at lower interest rates, your loan requests are more likely to be approved than denied, and also you can get great deals on credit cards. And these are only a few reasons to maintain a credit score of 750 or above. If you currently have bad credit, don't worry. All is not lost, yet.
There are several steps that you can take to improve your credit score and enjoy the amazing benefits mentioned above. Read ahead to find out how to make your awful credit score great once more:
1. Pay Bills on Time
Essentially, your credit score indicates what sort of a borrower you are and how good your financial habits are. If you are late on certain bill payments, or if you are often charged extra for missed payments, these end up being reported as delinquencies on your credit report. Delinquencies certainly hurt your overall credit score. About 35 percent of a FICO score is made up of payment history. That's right; missing a bill because of absentmindedness can have serious consequences. Therefore, pay all your bills on time. Better yet, automate payments, so a silly mistake doesn't end up costing you later.
2. Reduce Your Overall Debt
Your debt certainly is reflected in your credit score, but not in a good way. Debt itself does not necessarily bring down your credit score, but if the debt keeps increasing or remains intact, it will. Therefore, take steps to reduce the amount of debt you have. Pay off high-interest loans first, as these are the most likely to sink you further into debt. Also, if you have small loans that you can pay off in two or three months, do so before tackling heftier, long-term debts.
3. Keep Credit Card Balance Low
Nothing hurts your credit score more than credit card debt. Therefore, make sure you pay those credit card bills each month. Keep the balance low on all your credit cards as a rule. Don't move your credit card debt around by getting more cards, for example. Paying down the balance on credit cards, even slowly, is the best and only way to keep you credit score afloat. If you are forgetful, ask the bank to send you reminders or automate payments so you don't miss payments and make the situation worse.
4. Check Your Credit Report for Errors
Credit reports are not at all error-free. In fact, most credit reports contain a number of factual errors and even incorrect credit scores. Therefore, often check your credit report and score to make sure that your personal information, bank account information and the number of cards listed are correct. Check the debts listed and make sure these are yours only. Credit bureaus are known to have identities mixed up to the extent to proclaim alive people dead. So, don't assume that everything in your credit report is accurate and up to date. If you spot something wrong, immediately report it and haggle the bureau until they fix it.
5. Stop Cancelling Credit Cards
Credit agencies devaluate your score if you keep cancelling your credit cards. When you cancel a credit card, it causes your overall credit to drop, which credit bureaus assess as a sign of bad credit. So, it's in your best interest to keep all your cards active. You can lower the limit of an existing card or use it exclusively for essential payments as alternatives to cancelling. Also, cancelled cards do not entirely disappear out of credit reports for several years anyway.
6. Avoid Maxing Out Credit Cards
Maxing out your credit cards is one of the most common ways people end up ruining their credit scores. Therefore, talk to you bank and set credit limits high enough to avoid maxing out or getting close to the limit, which is just as bad. You should ideally underuse your credit cards to maintain a good score, as overusing and cancelling credit cards both hurt credit scores.
7. Don't Try to Get Rid of Old Debt That's already been Paid
You might think that any debt is bad for your credit score. It's not. If you have old debts that have been paid already, don't bother trying to expunge the records. Paid debts are a good thing and they reflect well on your credit score. Ultimately, creditors want to see customers who can repay borrowed money, so what better way to indicate a good borrower than settled debts?
As you can see, improving your credit score is not impossible. Remember to pay your bills on time, make an effort to reduce overall debt, use your credit cards wisely and your credit score will be fine. Also, don't obsess too much over your credit score. Bad credit is not the end of your life after all.