Inspect Your Credit Report
Approximately 1 in 5 people have errors on their credit report, according to a study by the Federal Trade Commission. What's more, about 5% of consumers had errors bad enough to affect their interest rates on loans or eligibility for credit in general.
All three major credit bureaus (Equifax, Experian, Transunion) allow you to request one free report per year. So make sure to get your hands on all three reports and inspect them closely for mistakes, such as payments erroneously marked as late or information that has expired but was not removed from your report.
Contact the appropriate departments to dispute any errors and get them removed. Once the dispute is resolved, your scores should reflect the difference within a month or two.
Pay Off Debts
To improve your credit score, it's imperative to pay up on any delinquent accounts so they no longer appear in your reports. And that's because payment history has the most significant impact on your credit score.
If the creditor won't remove the late payments, you can still pay to get the account current which will reflect positively on your credit report.
Pay Everything On Time
From here on out, you should be focused on paying everything on time. While it might not remove all the blemishes from your report, it will help balance them out to show creditors you are capable of making timely payments every month.
Even though this is the most time-consuming tip on our list, it's also the most important because of how influential payment history is on your credit score.
Stay Under Your Credit Limit
How much of the available credit you use – also known as credit utilization – also plays a major role in your credit score.
Typically, it's best to keep balances to 30% or less of your total credit limit.
Try taking care of your highest balances first or consider a loan consolidation program. This will reduce or eliminate your credit card balances – lowering your overall utilization.
Also, you can ask for a credit limit increase from your card issuer which would instantly lower your utilization. However, some creditors will require a “hard” credit check, temporarily lowering your score by a few points. In that case, it might not be worth the credit limit increase.
Get a Secured Credit Card
Even if you have terrible credit, you can still get a secured credit card to help build it back up.
This allows you to make a deposit in a credit card account - which then secures the line of credit with the financial institution of your choice. You can then use this card wisely to help show creditors you are back on track, financially speaking.
Add Rent to Your Credit Score
If you're currently renting your home, you can use this little-known credit trick that will help raise your score.
Regardless of where you live or how much you pay, you can have your rental history added to your credit report as “non-traditional” payment data. As long as your landlord will verify that you make payments on-time, you can use a company like RentTrack.com to supply the credit bureaus with the necessary information.
Consider Rapid Re-Scoring
While this credit hack only applies to people who are in the market for a mortgage, you can use it to clear up mistakes or inaccurate information super fast (usually within 48 hours).
Simply tell your mortgage lender you're interested in doing a rapid re-score, and they will reach out to the credit bureaus on your behalf to provide all the necessary documentation to immediately fix erroneous information on your credit report.
Be Patient
Just remember: raising your credit score is a marathon, not a sprint. There are many things you can do to help speed up the process, but you'll still have to wait several months – maybe even years – to see the full effect of your hard work.
Raising your credit score doesn't have to feel like a wild goose chase. Just keep being persistent and follow all of the steps listed above to not only improve your overall credit score but also the quality of your life and finances in general.
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