Repairing your credit fast is not as hard as most people might think. The time it takes depends on the different factors affecting your credit. Improving your credit score can make you eligible for lower interest rates and better terms. Your credit score might not be as bad as you think.
To repair your credit, start by checking your credit scores online. After getting your credit scores, you will also receive information on which peculiar factors are affecting your scores. Once you know where you stand, then you can know how to go about repairing your credit score.
Note that, before any change will be fully effected, you will need to allow some time for the changes to be reported by your creditors and subsequently indicated in your credit scores. Some bad credit score factors are more significant than others.
Payment history and credit utilization ratios are part of the most outstanding issues in many bad credit scoring models. When merged, they both influence your credit score hugely as they form about 70% of your credit score. Below are few actions to take that will help repair your credit score.
Pay on Time
Pay up your bills on time if you’re behind on any payments. A late or missed payment reflects negative information on your credit score. Your payment history is the biggest factor affecting your credit score; ensure to pay all bills and any existing bills on time always. Note that when you are repairing your credit score, you must not miss a payment.
Late payments can stay on your credit score for up to seven years, nonetheless, if some of your bills have gone to collection, sort out the ones where your account is still open. To ensure you do not miss any payment, you can use resources and tools available to you like automatic payments or calendar reminders.
Expand Credit Limits
Credit card utilization is another factor that affects your credit score. Having a balance of over 50% of your available credit will influence your credit score negatively. One way to improve your ratio is to pay down your balances; another way also is to expand your credit limit. To expand your credit limit, you are required to call your card issuer.
If your payment history is good, most credit card companies will be keen to expand your limit. Ensure you do not use up the extra available credit because it will pull you back to your previous credit ratio, meaning further debt.
Dispute Any Wrong Entry
Always ensure to check your credit for any error. Wrong information on your credit score could bring your rating down. Ensure that all accounts listed on your reports are correct. Should you notice any wrong information, quickly dispute the information and provide the correct information.
Open A New Credit Account
Get a card that does not charge an annual fee, though cards with no annual fee charge higher interest rates, nonetheless, if you don’t accrue a balance, the interest rate won’t matter. Do not open accounts just to have a better credit score, it might not improve it.
Unnecessary credits affect your credit score in several ways, from creating many hard inquiries on your report to enticing you to overspend and accruing more debt. Opening a new credit card can boost your whole credit limit, though the act of applying for credit forms a hard inquiry on your credit report. Note that too many hard inquiries will hurt your credit score as they stay up to two years on your report.
Leave Unused Credit Cards Open
A good approach to repairing your credit score is to keep unused credit cards open if they are not costing you any annual fees. Closing unused credit cards may surge your credit utilization ratio, thus owing the same amount. Having lesser open accounts, on the other hand, might lessen your credit scores.
Pay Down Outstanding Balances
Decreasing your ratio of available credit used can significantly boost your credit score. Though paying down balance may be difficult to realize, but its long-term benefit is worth it. You won’t need to pay much interest when you pay down the balance, also it would boost your credit score.
Retain Old Credit Cards
It might seem insignificant, but your old credit history has a positive influence on your credit score. The number of years you’ve had the account boosts your credit score. Closing down the account may lessen your whole average history and impact your credit score negatively. If there is any need for you to delete a credit card account, go for the newer cards.