How can you fix your credit score in 6 months? This is a process which demands commitment and is easier said than done. Fortunately, we got you covered with these 9 tips you can use to improve your credit score quickly.
- Understanding Your Credit Score
You should start by getting the actual picture of credit score. You can learn your credit score quickly using plenty of ways. One of them is through a direct call to your credit bureau to find out your score.
You can also use any of the several free online services or register for a credit monitoring service. This tracks your credit score, giving you relevant information about any slight changes. Check every entry on your credit report to ensure all the data are accurate. This is necessary because nearly 5% of consumers always have errors in their reports.
Consequently, they end up getting charged higher for a financial product or an insurance. If your report has anerror, you can lodge a complaint right away and have it removed. These changes can range from foreclosing on a mortgage to a recent filing for bankruptcy or being subject to an identity theft.
- Settling Your Debts
When it comes to improving your credit score, you should not only focus on your payment history but also the amount of debt. Your debt makes up about 30% of your credit score and it is what lenders use to determine your score.
You can start by clearing the smaller debts before focusing on the larger ones. You need to pay your debts to the minimum in order to achieve any effect so it is always important to pay as much as you can as early as possible. Payingoff your debt lowers both your debt level and credit utilization, improving your credit score in the process.
The next time you get some extra cash such as a bonus from work or the installment loans with a flexible repayment schedule, remember to allocate some fraction for debt payment.
- Do Not Close Old Accounts
The length of your accounts can also affect your credit score. Do not close your accounts even when you have zero balance. Leave the empty credit card accounts active if you intend to shift around your balances to fewer cards.
Opening a new account can be appealing to you because of a new credit line which can slightly improve your score. However, it comes with a limitation in the sense that you can lose between 5 to 10 points with credit inquiries.
- Paying Your Bills on Time
What then can be your credit score’s most vital part if not your ability to pay your bills on time? To improve your score within 6 months, you need to refrain from late payment within this period. Your credit score increases with your ability to do on-time payments.
Another priority should be to clear your past-due bills which can greatly affect your score.Seek advice from your billing company on automatic payments. However, you need to have enough money in your accounts for such payments, otherwise, you risk causing more trouble.
Paying your bills twice a month, instead of once, is another good method because it swiftly clears large debts that can accumulate with sudden expenses.You can rely on online installment loans to help you clear your bills on time and repay them at your own repayment schedule while improving your score.
- Consolidating a Single Debt
An accumulation of small balances can be a real burden. The credit companies consider these as “nuisance balances” and merging them is the best option to boost your score. There are two methods to consolidate your balances.
Firstly, you can transfer the balances to fewer higher-limit cards in case you already have a very bad credit. The second method is the best but demands a good credit score to enable you toget a lower interest rate at the bank. It involves applying for a lower-interest rate personal loan then transferring your balance from the high-interest credit card debt to the loan.
- Multiple Credit Forms
Approximately 10% of your credit score depends on the type of credit you have. Opening many forms of credit can be a better option. These can include the online loans which offer longer repayment periods and personalized repayment schedules. However, you should apply for these loans sparingly because getting many credit lines at the same time can damage your reputation.
- Avoid Indicators of Risk
Avoid risky behaviors that can damage your credit score in the long run. Forinstance, paying less cash than the expected amount will hurt your score. Besides, using your card on things that can lead to a financial crisis in the future can also have a negative impact on your score. Always think about the risks your card can create before using it if you lack a reliable source of funds such as the installment loans.
- Applying for Credit Sparingly
It is common knowledge that a new credit card or loan will loweryour utilization rate. However, credit inquiries hit your credit report and can hurt your credit score. The solution is to apply for a credit which will cause a dip in your score. You can then show your ability to manage your debt responsibly by keeping the money to increase your score.
- Staying under Your Credit Limit
Credit utilization is one of the biggest factors in your credit score. It is the actual amount of credit limit you are using. You can get it by dividing your balances by your credit limits and multiplying the result by 100%.It is necessary to keep your balances to 30% of your credit limit in order to fix your score. This can be achieved using two methods.
Firstly, you can make many small payments or micro-payments to keep your credit balance down.The other method is to ask for an increase in your limit which will, in turn, lower your credit utilization. It is important to consult your credit issuer first before asking for an increase to avoid lowering your score which often happens with inquiries.
Indeed, improving your credit score demands a lot of time and effort. However, with these and other right strategies, you can steadily improve your score in just a short period. Nonetheless, there is the need to be realistic about the strategies you choose.