Your credit score affects everything from qualifying for a home to getting a job. If you need to improve your credit score fast, this guide is for you. With a less than perfect credit score not only will you have trouble getting a mortgage or a car, but you may also pay a lot more on interest fees.
From what cards to pay off first to the difference between good and bad debt, we’ve rounded up everything you need to know about credit. Here are some easy ways to improve your credit score almost immediately.
1. Pay Off Revolving Credit
A credit card is an example of revolving credit. A good rule of thumb is to always keep your revolving credit balance low. The lower your balance is, the higher your score will be. This is because the credit bureaus take this as a sign that you aren’t spending too much on credit cards.
Your credit utilization ratio is how much of your credit you’re using. If you’re maxing out your credit cards each month, you’ll have a poor ratio.
It’s also a good idea to start with the cards that have the highest interest. Higher interest cards cost you more. Pay these off first to get the biggest bang for your buck. A personal loan can be used to pay off several high-interest revolving credit cards. Your cards will be paid off and you’ll have one easy loan payment.
2. Understand Good Debt vs. Bad debt
One of the most important things to know about credit is which is bad, and which is good. Yes, not all debt is bad. Mortgages, for instance, are examples of good debt. These are looked at as an investment and they show financial security and stability.
Retailer credit cards can be considered bad debt. These have high-interest rates and they will cost you a lot more in the long run if they aren’t paid off. The less bad debt you have, the higher your credit score will be.
How long does it take to improve your credit score? The answer depends largely on how much you’re able to pay off and when the creditor reports your payment. You can call them to see if this is done instantly after you pay your bill or monthly, for example.
3. Check Your Credit Score Often
If you’re trying to improve your credit score, you’ll want to check it often. Checking your score will help you know where you stand. You’ll also be able to see if you have any fraudulent charges.
According to Experian, a good credit score ranges from 670 to 739. 740 to 799 is very good and 800 to 850 is expectational. A fair score ranges from 580 to 669 and a very poor score is anything below 579.
The more you track your credit, the more you’ll see your progress as well. It will be a big motivation to see your score quickly improve. You can obtain a free credit report each year from the Federal Trade Commission. Your credit card company or bank will often offer a free credit score monitoring as well.
4. Improve Credit Score by Paying Your Bills on Time
To help improve your credit score quickly, change your payment habits. If you have trouble making your payments on time, make this a priority. Set automatic payments, calendar alerts, or reminders on your phone.
If money is tight, consider cutting back on other luxuries or entertainment to make your payment obligations on time. You can also pay part of your bill early each month and make the remaining payment on the due date to spread it out.
5. Keep Cards With High Credit Limits
While it might seem counter-intuitive to increase your credit limit, this goes back to the credit utilization rule. If you have a high limit you aren’t using, it shows creditors that you are responsible. The more credit you have that isn’t used, the higher your score will be.
If your credit is increased, make sure to get your balance paid off. Once you do so, use your card sparingly and make the payments automatic. Your card will be paid off each month, but you’ll still be actively using the card.
To avoid using all of your credit, use your debit card, a pre-paid card, or cash. This will help you stay within your means.
6. How to Improve Your Credit Score by Disputing Charges
If you have charges on your credit that aren’t yours, you can dispute them with the credit bureaus. By checking your score often, you’ll be able to stay on top of this. Once these charges are removed, you should see a nice boost in your score.
7. Have Additional Bills Reported on Your Credit
Not all of your accounts are reported to credit bureaus. If you have an account in good standing, you’ll want those payments to be recorded. Utility companies will often report to the credit agencies if you request it.
The longer you show good payment history, the higher your score will be. Check your latest report to make sure you’re getting credit for payments made on time.
How to Improve Your Credit Score Fast
There are several easy ways to improve your credit score fast. From paying your bills on time to keeping your debt low, a few quick adjustments to your spending habits can lead to a big payoff. Not only will your score improve, but you’ll also pay less on interest fees.
If you’re ready to start consolidating your debt and improving your credit score, fill out the contact form here to get in touch with a loan professional. There are several options available to help you pay off your debt.