How Can I Fix My Credit Score Now? We’re Glad You Asked.
When it comes to credit, you want to make sure that you have a good report. After all, these are the letters that employers and lenders look at. If you want to have big ticket items, like a mortgage, you will want to make sure that you have very good to excellent credit. Good to very good credit will get you other items, like a car.
Can I Fix it Right Away?
Fixing your credit will take patience. You can’t just snap your fingers, apply a few tricks, and expect a miracle. Alternatively, you need time and a strategy to implement a change in your credit score. This will require discipline and applying your knowledge of credit proactively.
How is a Credit Score Determined?
When it comes to your credit score, it is comprised of three numbers. The rating is from zero (zero, zero), to 900. Obviously, everyone wants to be at the top. But an excellent credit score can exist at just 750. There are also three major providers of credit scores- Equifax, Experian, and TransUnion. All of these providers can be checked at their individual sites or all together at Cafe Credit.
There are many factors that determine your credit score. Firstly, it has to do with your payment history. Do you actually pay your bills on time? Second, it’s about your outstanding balances and how much they are. Third, how long have you actually had your accounts open to accumulate credit?
Next, what type of credit are you utilizing. Rotating credit will score differently than installments. Finally, it matters how many accounts you are having pulled for scores by people as well as how many new accounts you are applying for. The above list goes from most important to least, so when you are looking this over, you can determine your priorities already for fixing your score.
Tips to Fixing your Credit
This is the part that is not easy. As mentioned above, you cannot just will away a bad credit score. Even if you take an entire week off of work to fix your credit, you won’t see the number budge much. This is because your credit score is an algorithm. You probably had some life experiences that led you to poor credit.
One of them would be taking out too many loans and not paying bills on time. This could happen if you lost your job as well as if you just got a little bit greedy with loans. Also, having university loans can even affect your credit. If there’s a couple months you cannot pay them, then this will certainly affect your credit. The following are five tips for repairing your credit:
1. Actually Establish Credit
In a rare twist of fate, it actually is important to start borrowing. Even if you never use your credit, it’s important to have loans out in order to qualify for more loans. You can do this by getting out credit cards. Even if you never use these cards, it’s important to start to show that you could be a responsible candidate when it comes to loans. With loans comes responsibility, so make sure you pay them off on time.
2. Don’t Overdo it With Loans
Simplicity is key when it comes to loans. Apply for one credit card, not ten. Having too many applications in a short period of time is a red flag. It signals that you are in need of a lot of money and fast. You might get red flagged as a spender who is out of control.
3. Be Vigilant with Paying your Bills
This might be one of the easiest ways to fix your credit. All you need to do is make sure your payments aren’t late. To do this, you might want to utilize technology. For example, put your regular bills on automatic payments. This will ensure that you are never late, so long as your balance is high enough to pay the bill.
4. Pay off More Debt
When it comes to debt repayment, make sure that you try to make higher payments if you can. One of the ways that credit ratio is determined is through your debt to credit ratio. The more you pay off, the better your credit will start looking. Some loans, like mortgages, won’t let you pay more off than you’re allotted to pay per month. However, you can pay off other debts such as credit loans faster.
If there is no set timeline for repayments and you have the money, make sure you do it. It may seem ironic that you should have credit cards out and then set out to pay all your debts. But this is just the way that credit works. You need to pay off loans quickly but still have the tools aka credit cards, so that you show you are allowed to take out more loans if you want to. It’s all about proving that you’re responsible with money when it is given to you on loan.
5. Constantly Monitor Your Credit Report
You can’t fix your credit score if you don’t even know it in the first place. You can look up your credit score for free three times a year. You can check your credit score at www.annualcreditreport.com. There are also free sites such as Credit Karma and Credit Sesame where you can get a credit report.
If all else fails, make sure you’re polite to your bill collectors. They’re just trying to do their jobs too. You can try to ask them to delay sending your bill to collections. Just talking to them can delay the dreaded black marks on your credit. Tell them you are trying and give them a timeline. You can ultimately negotiate will these companies to make a repayment plan.