Your credit score dictates almost everything in your life involving money, from getting a new cell phone contract to a car loan and even a mortgage. But, even as average FICO scores begin to reach new highs, around 20% of consumers are still dealing with a ‘bad’ credit score that’s less than 600.
If you are one of those people, then chances are you want to raise your credit score as much and as quickly as possible. Whilst completely rebuilding your score will take a lot of time and effort, there are some things that you can do to give it an almost immediate boost. These include:
Your credit score could be suffering due to factors that remain after the seven-year limit, or information that has been entered inaccurately. The best way to check for these unnecessary negative factors and errors is to request your credit report from one or all of the three main nationwide credit reporting companies: TransUnion, Equifax, and Experian.
Once you have your report, go through everything – particularly check for any late payments, unpaid bills, or outstanding debt that shouldn’t be there. If any information is inaccurate, you will be able to find more information in your report as to how and where you should send a dispute.
One of the most effective ways to immediately boost your credit score is to pay off as much of your outstanding balance as possible. If you have any smaller lines of credit such as short-term loans or small credit card balances, paying all or at least a large percentage of this debt off will give your score a boost.
30% of your credit score is based on how much you owe compared to the amount of credit that you have available, so paying down as much as possible will help to improve this ratio – and your score.
If you’re not in a position to pay down your balances right now, increasing your credit limit could be an alternative way of getting around boosting your credit utilization ratio – i.e. the amount of credit that you owe compared to how much you have available.
However, you should only do this if you are prepared to let the additional credit that becomes available to you stay unused, otherwise, you may find yourself in a worse position when it comes to your credit score.
Perhaps your credit score has taken a nosedive because you have accounts that are in collections. Don’t ignore these debts – doing nothing will be a disaster for your credit score as it looks like you have simply abandoned the debts. Call up your creditors to negotiate – paying a small, regular monthly payment towards outstanding balances or paying a reduced settlement amount to clear the debt always looks better on your credit score compared to simply doing nothing.
Although there’s no fool-proof way to boost your credit score a large amount in a short amount of time, these strategies will help you see some immediate improvement to your next report.