How To Improve Your Credit Score Fast
Credit scores are used to measure people’s financial health. They help lenders to understand how borrowers are responsible for their credit. When you’ve got a better credit score, it becomes easier to get a new loan to invest in various options of your choice. Additionally, a good credit score attracts lower interest rates. A good credit score will generally save you a lot of money in the long run, regardless of whether you want an auto loan, home loan, or another financing. Lenders view people with better credit as low-risk borrowers. If you’ve got poor credit ratings, some lenders will shy away from giving you money. Even if they give you, you’ll have to pay pretty higher interest rates which can be quite costly in the long run. There are many ways to improve your credit score faster, as explained below:
1. Begin by building your credit file
The first step to improving your credit score faster is to build your credit line. Open new accounts, which all credit bureaus will report them to card issuers and other lenders, including banks, mortgage lenders, etc. Generally, it’s essential to have some accounts registered under your name to begin your journey of improving your credit score. These accounts must also be active and include secured cards and credit builder loans. You can also find an authorized user to help you out, provided they’re responsible for how they use their cards. However, if you don’t have any credit files, you should ask for your credit report from any credit bureaus. Experian allows free membership for borrowers who want to build credit.
2. Check for possible errors on your credit report
Sometimes, you might have a lower credit score due to errors in your credit report. This mainly happens if you don’t analyze your credit report from time to time. If you come across errors such as payments made but didn’t reflect, duplicate accounts, and misreported payments, you should dispute them as soon as possible for rectification. It’s essential to always contact credit bureaus from time to time and ask for your report so that you can analyze all payments and see if there’s some missing information that could possibly be hurting your credit score.
3. Avoid missing payments
One of the greatest things considered when calculating your credit score is your previous payment history. For you to have a great credit score, you must have a pretty longer payment history. You can attain this if you’re not responsible for paying your debts or bills more timely. If you default on paying any debt, be sure that you’ll be reported to bureaus which will likely lower your credit rating. To avoid the issue of missing payments, you can automate payments such that once the due date reaches, the payment is made automatically to the right party. This way, you won’t have to remember the dates to make your payments. You can also talk to your card issuer on the way forward if you’re facing difficulties paying your bills.
4. Pay any revolving credit balances
People with high credit balances risk hurting their credit scores due to increased credit utilization rates. Therefore, if you’re in a position to make extra payments for your debts every month, go ahead. This will help you maintain a lower credit utilization rate. The rate at which your credit score will improve will be based on how faster the creditor or lender will report all balances you’ve paid on your report. The earlier you pay off any revolving credit balances, the better your credit score will be. You can easily track your spending if you pay these outstanding balances faster. It’ll even be better to pay the balances in advance.
5. Update past due accounts
If you’ve got some past due accounts, you can benefit from updating them. Typically, late payments stay on credit reports for a maximum of 7 years. Therefore, if you update your accounts, you can easily improve your credit score. This will help you by restricting further additional late payments and fees on your credit report history. If you’re experiencing problems with your credit card debt, get into a debt management plan or simply talk to an expert credit counselor. The best thing about talking to an expert counselor is that it’s easier to negotiate lower interest rates and payments on your behalf to update your accounts.
6. Timely payment of bills
Every time you pay your bills late, be sure that the information will remain on your credit report for about seven years. This can potentially affect your credit score, especially if you miss making the required payments by at least thirty days. It’s always advisable to contact your creditor or lender to inform them before they report you to credit bureaus for further action. After you contact the creditor or lender, ensure that you give a detailed explanation about why you’ve defaulted and give them specific timelines on when you’ll make the required payments. Since you can talk to the creditor or lender to hold on from reporting you to the bureaus, this shouldn’t be a recurring issue since they might conclude that you’re taking the advantage to make late payments from time to time. To make timely payments, you can also automate payments or set up account reminders.
7. Contact credit bureaus to remove negative entries already paid
In most cases, you might make late payments on your debts which could still be showing as unpaid on your credit score. This can hurt your credit rating if you don’t take immediate action. In this case, you should contact credit bureaus and ask them to remove such entries provided that you’ve got payment evidence. Alternatively, you can talk to debt collection agencies or original creditors to update payments that are missing from your report even though you’ve fully paid.
In conclusion, these are some top tips on how to improve your credit score faster. Generally, your credit score will be affected by several factors, including payment history, credit mix, credit usage, recent credit, and length of your credit history. If you’ve got a busy schedule such that you can’t get adequate time to ask for your credit report for analysis, you can sign up for credit monitoring. This way, you’ll get alerts whenever there are changes to your credit report.