There’s aren’t quick fixes or overnight solutions. However, with a little planning and a lot of dedication, you can improve your credit score in a short amount of time.
Maybe you already know what a credit score is and how it may impact your financial health. If not, here’s a quick run-down:
Your credit score is a numerical value that ranges from 300–850 and is based on factors such as any debt you already have, the length of your credit history, and the history of your payments. This score reflects how well you manage your debt and whether you pay your bills on time.
Have you ever applied for a credit card, purchased a cell phone and plan, paid a utility bill, purchased a car, or received a loan from another business? Well, then you have established a credit score.
Ideally, the goal is to have a higher credit score. Why? Well, if you’re looking to make any large purchases such as those mentioned above without any high interest rates or strict penalties, you’ll need a good credit score.
Having a bad credit score is like having a serious dairy allergy. By looking at you no one would know the allergy exists, but there are a bunch of goodies this condition may be keeping you from trying. Similarly, while another person can’t figure out your credit score just by looking at you, the reality is that a poor credit score can still be impacting your choices in life.
If you are struggling with a low credit score, there are steps you can take to give your score a quick bump. Here are two actions you can take right away to start inching your score in the right direction.
Check your credit report for errors
With identity theft showing it’s face in a number of places and sometimes unbeknownst to the person, it’s a good idea to check your credit report and make sure all of the negative information on it belongs there!
Each of the three credit bureaus — TransUnion, Equifax, and Experian — offers free access to your credit report once per year. This means you can pull your credit for free three times each year — once from each bureau.
If you find any errors on your report, be sure to dispute them with the creditor and the credit bureaus to get them removed. These errors on your credit report could be unknowingly impacting your credit score.
Pay your bills on time
There are five different categories of information that go into your FICO credit score. Of those five, the one you should pay the most attention to because it is most important is your payment history. In fact, it makes up 35% of your score.
Want to gain better credit? Pay your bills on time.
Use your credit card responsibly
Proper credit card use is one of the most dependable ways to build credit. You can achieve this by paying off your bill in full each month. Not only does this prevent you from accruing interest on remaining balances, but it also helps to keep your credit usage in check.
Be aggressive in paying down your debt
Paying down outstanding debt is one of the most effective ways to raise your credit score quickly. This is because your credit history and the amount of debt you owe make up 65% of your total credit score.
Often, that’s easier said than done. You may be in a situation where you must choose between building your savings up and paying off debt. However, the more strategic you can be about paying off your debts, the sooner you’ll be on your way to improving your credit score.
What we’re really trying to say is: Consistency is key. Keep paying your bills on time, make sure your debt-to-credit ratio continues on the decline, and stay the course! It will be worth it in the end.