If you plan on boosting your credit score, it will never happen overnight. Your credit score is measured by compiling and analyzing years of previous transactions that you have made over the years, and is not based on only your recent activity.
As you start your journey to boosting your score, always remember to take it at a slow steady pace and not rush. A bad credit score may possibly cost you hundreds of dollars, an numerous opportunities, if you do not take it seriously. It can also be stressful, making you feel that your past decisions are haunting you and you can never move on. Fortunately, you are not alone facing this problem. A lot of people have a difficult time boosting their own credit scores. But there are some steps you can take now to begin your journey to a better credit score.
Check If Your Credit Reports Are Accurate
The best way to start increasing your credit score is to assess your credit reports. Each of us has three different credit reports from the three major credit organizations which are Experian, TransUnion and Equifax. Since all credit scores are based on the information in credit reports, it is absolutely crucial to ensure that all the data provided is accurate. If there are errors on your credit reports, it will directly affect your credit score.
It is really simple to assess credit reports from each of the three major agencies. Once a year, you are entitled by law to receive a free copy of all three credit reports. Also take note that even if one of report from a certain credit bureau has an error, the others may not have those errors. This is why it is essential to check all your credit reports to assess their accuracy.
If you find similar errors on all your credit reports, you must file a separate dispute with each agency, because they are being run individually from each other. In fact, except in cases of suspected fraud, it is illegal for the three agencies to share information. If there are multiple errors, you will also need to dispute them separately for every error you will find. Disputing credit report errors is totally free, but it is recommended to hire a credit counselor or a credit repair agency to help you fix your credit report.
Create A Plan
After assuring that all information in your credit report is accurate, your next step is to create a plan to improve it. There are a lot of websites that will help you create an action plan and lets you monitor your credit score as it improves over time. There are ample resources online to help you, including other blog posts that we have put together to help you, so take advantage of as many resources as you can.
Try and keep your credit card debts at a minimum. You can also put in your plan that you should immediately begin paying debts in full, rather than shifting them from card to card. Do not try and register for a new credit account or get a new loan that you specifically don’t need. If you use methods like these, you are just increasing the credit debt you already have, and could potentially lower your score even further.
Pay Credit Balances
A good way to boost your credit scores is to erase nuisance debts. These are the little balances you accumulate on each of your credit cards. This is an important technique to improve your score, because missed payments, and high accumulated interest, all contribute heavily to damaging your credit score. So if you are buying multiple items with different credit cards, it can lower your score if they are accumulated. It is better to use one card for all your small purchases.
The best way to do this and improve your score is to collect all those credit cards with small balances and then pay them, starting with the cards with the highest interest rates. Then, pick one or two cards that you will use for everything. By doing this, you will help manage your billing cycles by having only one or two accounts to focus on, rather than multiple cards.
Pay Bills On Time
If you are planning a huge purchase such as a car or a house, be careful as you are going to build on a large chunk of cash. When you have bills to pay, don’t ever be late in paying them. Even if you have a lot of savings in the bank to use towards a down payment, even a drop of a few dozen points in your credit score can make the difference between a great deal and no offer at all.
One of the most important factors in building a great credit score is to simply pay your bills on time, month after month. Remember that credit scores are measured by what is in the credit report. If you are always missing your schedule in paying bills, it does a significant damage to your credit and will reflect on your credit score. Putting some cash into your savings bank for a big purchase is a smart decision. Just remember to set your bills as priority as well.
Build A Strong Credit History
If someone has a short credit history, then there is not much they can do to immediately increase their credit score. One option, if you’re just starting out, is to either open a credit card or take out a small loan so that you can begin building credit.
If you’ve already had access to credit for awhile, all you can do is be responsible with your credit, and wait. Don’t automatically close a line of credit, just because you aren’t using it. Your credit history resets after seven years (although certain aspects, like any foreclosures, carry over), so it definitely takes some time to have any sort of impact. If you have a long and positive history, your credit score will improve to match. If you have no credit history at all, it will take 4 to 6 months to see any type of purchase be recorded on your credit reports.
Follow these tips to gain helpful strategies in maintaining and managing a great credit score. If you have accumulated bad credit, don’t obsess on it. Rather, be a responsible with your credit, pay your bills on time and in full, and stay updated with your accounts so that you can successfully manage your own finances.