A poor credit score can make it difficult for you to get a loan at the best rates. If your score is low enough, you won’t qualify at all. Needless to say, there are plenty of times when you might want to raise your credit score as quickly as possible. Even a slight increase in score can help you qualify for better rates. While there’s nothing that can immediately repair the score you’ve earned from years of poor choices, there are a few things that might help increase the score to help you with an upcoming big purchase.
Order a free copy of your credit report from AnnualCreditReport.com and comb through all the details. Make a note of any mistakes you might find. For instance, the report might show that you have a credit limit of $3,000 when it’s actually $5,000, or it might be showing late payments that you know you made on time. If there are any of these mistakes on your report, take immediate action to set the record straight. Contact the credit bureaus directly in writing to dispute the mistakes. They will then have to research the issue with the creditor. You can also contact the creditor who’s made the mistake. They can sometimes push through the change a lot more quickly. These fixes are likely to have an immediate positive effect on your score.
Pay Down Debt
A large part of your credit score is the ratio of debt you have to available credit. When you pay down this debt, your credit score starts to increase. In general, paying off debt is a long-term strategy for improving your credit score. However, when you realize the role that this debt ratio plays on your score, you might feel more inspired to pay it off in larger chunks. For instance, you could use your upcoming annual bonus or tax refund to pay off debt rather than pay for the next vacation. Challenge yourself to save on groceries by using up all of the food you have in your pantry and freezer, then use the money you would have spent on groceries to pay off your debt. The faster you can pay the debt down, the faster your score will increase.
Make Additional Payments
This ties in with the idea of working hard to decrease the debt ratio, but it’s worth mentioning that you can always pay money toward your debt more than once a month. For instance, if you accidentally left your debit card at home and had to make a payment with the credit card, you can transfer that money from your bank account to the credit card as soon as you’re near a computer. It’s also possible for you to transfer $20 here and there. Those small amounts will quickly add up to a better credit score.
Alternatively, you may be able tackle your debt ratio from a different angle. By asking the company to increase your limit while you continue to work on paying off your debt, you reduce the debt ratio. However, this is something that should only be done with extreme caution. The technique only works if you are confident in your ability to not use the additional credit that’s now available to you. Remember to keep your eye on your goal of reducing debt and improving your credit score. It’s also important to note that if your usage is already close to the current limit, there’s a good chance that the credit card company will deny your request to increase the limit.
Become an Authorized User
Other people’s good credit can rub off on you if they’re willing to add you as an authorized user on one of their accounts. In many cases, you don’t even need to have access to a credit card in your name to be an authorized user. If you have bad credit, though, most people will know that this is a risky proposition. In general, only a parent or spouse is willing to take on this type of risk for you. Show them that you’re worth it.
Get a Credit Card
If your low credit score comes primarily from a lack of credit on which to base your report, then getting a credit card and using it responsibly can be a great way to start building up your score. If you’re just starting out in life, the credit companies can’t know whether you’re trustworthy or not, so they keep your score low until they see that you make on-time payments. While you may not qualify for every card on the market, it’s usually relatively easy to get a store credit card.
Building up your credit is something that can take many years, but even a small increase in score can put you on the right path. Remember that you should always make your payments on time and refuse to use your credit to pay for a lifestyle that you really can’t afford.