How to Improve Your Credit Score | BankruptcyHQ
You may improve your credit Score by first rectifying any inaccuracies in your credit history (if any exist) and then taking these steps to maintain a consistent and strong credit history. To restore damaged credit or create a credit for the first time, patience and discipline are required.
A low credit score isn’t something that can be corrected immediately. On the other side, quick-fix methods are more likely to fail, so be skeptical of any advice that claims to improve your credit score soon.
When it comes to credit repair, the best advice is to do it slowly and deliberately. Before your credit score improves, you’ll need to repair your credit history if you haven’t previously. The steps outlined below will help you complete this activity.
What Can You Do to Improve Your FICO Score?
Examine your credit report for any errors
Look for any mistakes on each of your credit reports from the three credit agencies. To dispute any incorrect or missing information, contact the credit reporting agency and your lender. Learn how to correct mistakes on your credit report.
Remember that seeing your personal credit report or FICO score has no bearing on your credit score.
Make your payments on time every time
Making timely payments to creditors and lenders is one of the essential factors in calculating your credit score, accounting for 35% of your FICO Score. Previous errors, such as missing or late payments, are difficult to reverse.
- Pay your bills on time: even a few days of late payments or collections may adversely affect your FICO Scores. Set up payment reminders using your bank’s internet portal if it offers one. To have payments debited from your bank account, regularly enroll in automatic payments with your credit card and loan providers.
- If you’ve fallen behind on payments, make up the difference and stay current: bad credit won’t persist forever. The longer you pay your bills on time after being late, the better your FICO score will be. The impact of earlier credit difficulties on your FICO Scores diminishes as time passes and new good payment habits reflect on your credit report.
- Even if you pay off a collection account, it will continue to appear on your credit report for another seven years.
- Contact your creditors or seek advice from a qualified credit counselor if you’re having trouble making ends meet: this won’t immediately boost your credit score, but if you can start managing your credit and paying on time, your score should rise with time. If you seek assistance from a credit counseling program, your FICO score will not be impacted.
Reduce the amount you owe on your credit cards
The debt-to-available-credit ratio, also known as credit usage, accounts for 30% of a FICO Score’s calculation. Cleaning up your credit is easier than cleaning up your payment history, but it still requires financial discipline and understanding of the solutions listed below.
- Keep your credit card and other revolving credit balances low: owing a big sum of money might hurt your credit score.
- Pay down your revolving (credit card) debt rather than moving it around: The most efficient strategy to boost your credit scores in this area is to pay off your revolving (credit card) debt. If you have the same amount of debt but fewer open accounts, your credit score will suffer. Make a payment plan that prioritizes the credit cards with the highest interest rates, allocating the majority of your monthly budget to the first and making tiny payments on the amounts that remain.
- Don’t cancel unused credit cards if you want to increase your credit score rapidly.
- If you don’t need more credit, don’t open a slew of new credit cards: this plan might backfire and negatively impact your credit score.
Here’s where you can learn more about how to raise your FICO score and maintain your credit in good standing:
- If you’ve just recently begun monitoring your credit, avoid opening a large number of new accounts since this will lower your average account age, which will have a greater impact on your credit scores if you don’t have much else. If you’re a new credit user, rapid account growth may appear concerning.
- Do your loan rate shopping in a short amount of time: FICO Scores distinguish between a single loan search and a search for several new credit lines, in part, depending on how long you spend looking.
- Rebuild your credit history if you’ve had credit problems in the past by opening new accounts and paying them off on time. In the long term, this will boost your credit score.
- Your credit score is unaffected by obtaining your credit report directly from the credit reporting agency or via a third-party entity authorized to disseminate credit reports to consumers.
- Only apply for and create new credit accounts if you need them; don’t do it only to vary your credit mix—doubtful it’s that you’ll be able to raise your credit score this way.
- Credit cards and installment loans (if paid on time) may be able to help you rebuild your credit. For example, someone who has never used a credit card is more susceptible than someone who has safely used credit cards.
- It’s important to note that canceling an account will not delete it from your credit report; it will remain on your credit record and may be used to calculate your credit score.