A poor credit score will be costly. You will pay more interest and may have difficulty finding employment or a place to live. Fortunately, there are a number of quick and easy ways to boost your credit score.
Here are some tips if you are struggling to improve your credit.
Shop for rates over a short period of time
Creditors need to run hard credit checks before approving any line of credit or even offering a rate. You probably already know that every credit check will ding your credit a little.
What you probably didnât know is that these hard credit checks will hurt you more if they are spread over a longer period of time. You donât want to take your time looking for a new line of credit. Your credit will suffer if you make multiple applications over the course of several months. Do your research first and apply to them all at once.
Pay higher interest debts off first
FICO and other credit reporting agencies donât account for the interest rates of your debts. However, it is still a good idea to make higher payments on your higher interest debts if you can afford to pay extra. You will owe less interest the following month, which will make it easier to put a dent in your debt by paying the same amount.
Increase your credit limit on existing accounts
Nearly a third of your credit score is determined by your credit utilization. If you are in debt, this means you can improve your credit score by having more credit, provided you donât use it of course.
You have two options here:
- You can take out new lines of credit.
- You can increase the credit limit on your existing accounts.
Always opt for the second option. There is no downside to increasing your credit limit, as long as you have the self-control not to utilize it. The downside of taking out new lines of credit is that your credit score will drop, especially if you take out multiple at once.
Rectify any errors on your credit reports
Neither creditors nor the credit bureaus are perfect. They are bound to make mistakes on reporting or recording consumer data. In fact, nearly 20% of Americans have mistakes on their credit report.
This is why it is so important to check your credit reports. You may discover errors that can be hurting your score, which should be promptly addressed. You may be surprised by how much your score will rise.
You can consider using a credit repair company. However, it is important not to use one that offers guarantees or pressures you to break the law.
Negotiate outstanding debt
If your account ends up in collections, it will hurt your credit for seven years. There is it anything you can do about that specifically. However, you can still limit the damage.
Always try to negotiate debt settlements after your case goes to collections. You wonât erase the collections from your credit report, but you will be able to lower your outstanding debt. This will reduce your credit utilization ratio, which will in turn improve your credit score.
Try making payments twice a month
Most people just want to pay their monthly balance off and forget about it. Even if they have extra money to spend, they usually want to simplify things by making a single payment.
You donât want to do this, even though it sounds sensible and convenient. You need to keep in mind that the credit bureaus only receive payment history once a month. If you pay every two weeks, you donât have to worry about any issues that can be caused by having a lag between the payment and the reporting date.
Raising your credit score doesnât have to be difficult
Having a low credit score doesnât need to be a life sentence. There are plenty of quick and easy ways to improve it. You just need to understand how the credit bureauâs work and take the right steps.
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