If your credit score is not great or even good, don’t despair. You have the power to change it. It might take months or possibly years to get close to the coveted 850 credit score, but it can be done. You can get started by taking these tips into account.
Check Your Credit Report
The most effective way to improve your credit score is to keep a close eye on it. Start by ordering your free credit report from AnnualCreditReport.com — everyone gets one free report every year. It won’t tell you your score unless you pay a fee, but it will let you instantly see all the accounts that add up to your credit rating.
Your first goal should be to make sure your report is accurate, starting with your contact information, birth date and social security number. Then look at the accounts on your report. They should all look familiar. If you see any accounts that you did not open, you should follow the steps on the site to get the errors fixed. Similarly, if you see late payments reported that you know you made on time or you see derogatory marks that don’t belong there, you can contact the creditor. If the creditor does not fix the error, you can dispute it.
Establish Credit by Using a Credit Card Responsibly
If your credit report is pretty bare, it may be time to get a credit card. You might wonder how that will improve your credit score since most people are advised to avoid credit cards. But the fact is that you need to show the credit bureaus that you can handle credit well. This is hard if you don’t have any accounts to handle yet.
This doesn’t mean you should go out and apply for a car loan or mortgage to improve your credit score. You won’t have much of a shot at these types of loans if you don’t have any credit to your name. Instead, start by getting a credit card. Your best bet is to apply for a secured credit card. With this type of card, you pay either a portion or the total amount of your credit limit upfront and then use the card. Since you pay the creditors ahead of time for this type of card, you know you’ll likely be approved, even without any credit history. Then you can work on building your credit by making your payments on time.
If you already have some credit, but what you have is poor, you may be able to get an unsecured credit card to improve your credit score. The only catch is that you might have to apply for a credit card for people with bad credit, which may have a high interest rate. But the good news is that once you get one, use it regularly and make your payments on time, you will improve your credit score so you can eventually apply for credit cards for people with good credit.
Pay Your Bills on Time
If the main issue with your credit report is that you have a lot of late payments that were reported to the credit bureaus, you can turn it around by making sure you never miss a payment again. Even if you can only make the minimum payment some months, it’s crucial that you pay on time. Otherwise, you will likely be facing fees and a lower credit score after it gets reported to the bureaus. And if it’s a credit card payment you missed, you might also end up with a higher interest rate.
This is why many people with good credit automate their payments so they always get paid on or before the due date. If you are ever having trouble paying a bill, your first step should be to contact your creditor to see if you can make arrangements to pay late without it affecting your credit score. And keep in mind that the longer you pay all your bills on time, the less your score will be affected by any late payments you made months or years ago, which means it’s never too late to get into this habit.
Pay Down Debt
One of the best ways to improve your credit score is to keep your credit utilization down. More specifically, you should strive to keep your credit card balances at less than 30 percent, meaning you have at least 70 percent available. If you’re a little above that, just keep paying down your balances.
You can also get faster results by requesting a credit limit increase, which will automatically reduce your credit utilization. Just be sure you don’t spend more once you get an increase! And if your credit utilization is already around 30 percent or less, keep paying it down, since many people with the best credit scores boast credit utilization of 10 percent or less.
Get Help from Credit Experts
If you’re feeling overwhelmed as you work to improve your credit score, you can come to us for help getting started. We’ll give you a free credit consultation so you can see what you need to improve on your credit report. We’ll also help you dispute inaccuracies on your report and monitor your credit so you know about any changes to your credit right away. Contact us today if you’re interested in getting help improving your credit score.