While you might be tempted to believe that your credit score is decided by some mysterious formula controlled by the three major credit agencies, it’s actually easy to understand how your score is calculated and more importantly, easy to change it in the way that you want it to go! If you have bad credit or just not-so-good credit, you can use these 10 tricks to quickly repair your credit and get it back on track so that you can start taking out loans and make purchases with ease again!
1) Check your credit report for errors
Your credit report is a living, breathing thing. It’s always changing and it’s important to review it on a regular basis for errors. You should check your credit report at least once per year for accuracy. Make sure you request the three major credit bureaus: Equifax, Experian and TransUnion.
2) dispute any errors you find
You can also dispute any errors you find on your credit report. Send a letter by certified mail, return receipt requested, that disputes the errors, and include copies (NOT originals) of any evidence that supports your position. You must send the letter within 30 days of receiving your credit report or the credit reporting company will not investigate the dispute. You may be able to file a complaint with the Consumer Financial Protection Bureau if you are not satisfied with how the credit reporting company responds.
3)Pay your bills on time
If you want to quickly repair your credit, pay your bills on time. This will help you avoid late fees, which may make it difficult for you to take out loans in the future. Close old accounts that have bad information: It is important to close old accounts that are not in good standing or that have bad information listed with them.
4)Pay off debt
If you are in debt and have the means to pay it off, do so. Paying off your debts can help increase your credit score because the less debt you have the better. Choose one with low or no fees; this is important because many people that start out with bad credit wind up paying high rates on their cards if they don’t shop around first.
5) Use a credit monitoring service
If you are worried about your credit, it is a good idea to sign up for a credit monitoring service. This service will alert you if there is any suspicious activity on your credit report and can help you catch potential fraud before it damages your credit score.
6) Keep your credit utilization low
Credit utilization is a percentage that represents the ratio of your credit card balance to the total amount of available credit you have on that card. For example, if you owe $1,000 and your available credit limit is $5,000 then your credit utilization would be 20%. Keeping your credit utilization low can help improve or maintain your credit score because it shows lenders how responsibly you manage debts.
7) Avoid opening too many new accounts
Opening too many new accounts might hurt your credit score, especially if you don’t have a high credit score. For example, opening six credit cards in one year will lower your FICO® Score by about 20 points.
8) Don’t close old accounts
Don’t close old accounts. The oldest account on your credit report will typically have the most weight when it comes to calculating your score. Closing an account could lower your score and make it harder for you to get approved for future loans.
9) Consider a credit freeze
A credit freeze may be one of the most powerful ways to repair your credit. This is a process in which you will request that all three credit agencies (Equifax, Experian, and TransUnion) place a hold on your account. If someone tries to get access to your account or open up an account in your name, the agency will reject their request because they are unable to verify who you are. There is no charge for this service and it can be done online or by phone call.
10) Get help from a credit counseling or repair service
If you have a poor credit score, the best way to repair it is by contacting a credit counseling or repair service. These services provide one-on-one consultations with certified professionals who can help you understand your options and create an action plan that will improve your credit rating. The process typically takes three months or less, depending on the severity of your situation.
