Whether we like it or not, our credit score will determine whether or not will be approved for a loan, a credit card, a mortgage, an apartment, insurance, and much more. With the downturn of the economy during the Great Recession, many people found their credit scores in dire straits.
Now that the recovery effort is in full swing, there are a great many Americans that find themselves on better financial footing. Although roughly 1/3 of American adults have a poor credit score of under 600.
If you are one of the unlucky ones with poor credit, you can give your score a quick boost by using the following techniques.
Clean up Errors on Your Credit Report
Before moving on to other ways to help build your credit back up, you need to go to all three credit unions including Experian, Trans Union, and Equifax, and get a free copy of your credit report.
To get a free copy of your credit report from all three credit bureaus, visit AnnualCreditReport.com. After you have these reports in your hand, take some time to examine them closely. Specifically, look for unpaid bills and accounts that have late payments.vAnd make sure this information is accurate. If it’s inaccurate for some reason, then you need to send in a dispute to correct the error(s).
A clean, error-free credit report is only one important credit score factor. But it is definitely a factor, and it could even affect your ability to rent property, get a job, and much more.
Work on Paying down Your Balances
According to the information shared by FICO, the company that calculates the credit score that is most widely used, they say that 30% of your total credit score is based on the amount of money that you owe.But your score is determined by much more than the amount of money owed.
Really, the main deciding factor is the amount owed compared to the amount of credit given to you.
As an example, if one your credit cards gives you $10,000 worth the credit and you’ve maxed it out, then you’ve used up 100% of your credit.
This is not good since spending anything over 30% of your available credit will have a negative impact on your total score.
So, sticking with the example above, the best way to raise your credit score is to begin working on paying down that $10,000 balance until it gets below $3000.
This will have an immediate and positive impact on your overall score and make you appear much more creditworthy in the eyes of potential lenders.
According to CreditRepairServices.co, a website providing information that may be worth the cost of a good credit repair service, “If your credit report contains negative information that is accurate, you can still restore your creditworthiness by making a serious effort to repay your existing bills and debts.”
Increase Your Credit Limits
Let’s say you have high balances but you’re not in an immediate position to begin paying them down. All hope is not lost in this scenario.
By taking a different approach, you can ultimately achieve the same thing by lowering your credit to debt ratio.
Contact your credit card company and ask them to increase your credit limit.
The higher your credit limit, the less impact it will have in relation to your current balance.
If you do not buy anything else to add to your balance, you will be able to lower your ratio accordingly.
If you truly want to boost your credit score quickly, please implement the previous steps mentioned and you’ll see a dramatic increase faster than you might think.