Having a low credit score comes with a variety of consequences. It can lead to rejection from loans, unfavorable interest rates, apartment rental problems, employment issues, and more. If you’re serious about your financial future, you should prioritize raising your rating as quickly as possible. What you might be wondering is how you can do that. Luckily, there are a few simple methods that lead to fast repair without causing too much stress. Below, we prove that to you by explaining how to improve credit score in 3 easy steps.
Step #1: Fix Errors in Your Report
If you want to improve credit score quickly, you should know what is making your rating so low. That could be a missed payment, carrying too much debt, or any other credit lowering behaviors, but it could also be a mistake on the part of a credit company. In this case, the credit bureau penalizes you for something you never did. To avoid this trap, you must correct any errors on your report. You can do so by carrying out the following tasks.
• Request a Credit Report
The place to find errors is in your credit report. To obtain one, visit AnnualCreditReport.com and make a request. This service is 100% free as long as you only apply once per year. If you’d like more in-depth credit information, you can opt for a paid option instead. They will likely give you additional features such as your score, where you stand among other consumers, and more.
• Print it Out
While you can scan for errors on a computer screen, we find that they are easier to catch when your report is on paper. For a task as important as this, you’ll want to do everything you can to ensure you don’t miss anything. One way to do so is by printing your report.
• Highlight Errors
As you go through your report, keep an eye out for any possible errors. If you see one, highlight it and move on. Once you scan through all of the documents, you can go back and review your highlights and deal with them one by one.
• Obtain Documentation
If you find an error, you’ll need to prove that it is a legitimate mistake. Your word is not good enough for credit bureaus, so make sure you have some solid documentation to back up your claim. When you find it, print it out and hold onto it until you send in your letter.
• Write a Letter
Finally, send in a letter to the offending credit bureaus. When you do, be sure to outline what the mistake is clearly. Next, tell them what you want them to do about it. Lastly, include your documentation in the same envelope and send it in. For more guidance on how to write a letter, check out this example from the FTC.
After a few weeks or months, the credit bureaus will get back to you. Most likely, they will fix the errors, and your score will rise instantly. Occasionally, something that you think is a mistake actually is not, and the bureaus will tell you where you went wrong. Either way, pursuing possible errors is a critical step if you want to improve credit score fast. One thing that gives some consumers trouble, though, is knowing which errors are most prevalent. To help with this issue, review the following list of common mistakes.
• Personal Information
If your name is similar to somebody else’s, credit bureaus might mix them up. Additionally, they can list your contact information incorrectly and inconvenience you throughout your correspondence. For these reasons, you should not skip over your personal information when looking for errors.
• Accounts You Never Opened
If you find a line of credit that you never opened, there is a good chance that identity theft is the cause. If this is the case, you need to take measures to protect yourself right away. Next, you should request that the bureau removes the account from your record.
• Accounts You Already Closed
Conversely, you may have closed an account but still see it on your report. This can cause a depression in your score.
• Duplicate Accounts
If the bureau lists the same account twice, that will wrongly raise your existing debt, which will lower your score.
• Payment Errors
Missed and late payments are the most damaging aspect of your report, so if any of them are illegitimate, you should take care of them quickly.
• Outdated Information
The standard statute of limitations for debt is 7 years. After that time passes, it should fall off of your credit report. If a debt stays on past the statute of limitations, this is an error, and you should remedy it.
Step #2: Keep Your Utilization Low
To improve credit score quickly, you should also target credit utilization. What this term describes is how much of your credit limit you are using. Generally, you want to keep that number below 30%, but the best highest scoring consumers go as low as 10%. The primary reason why people utilize more than they should is carrying debt. Often, they run a deficit every month and accrue a significant amount of money owed. Not only does this affect their credit score, but it will cost them in the long run. Here’s how to avoid this pitfall:
• Pay Debt Down
Your first tool in lowering utilization is paying your debt down. This will do two things for you. First, your usage will fall, and your credit score will rise. Second, you will save money by not paying as much interest every month.
• Ask For a Credit Limit Raise
Your second option is raising your credit limit. Depending on your standing with your financial institution, this should be a straightforward process. Once you make a request, they will accept or deny it quickly.
• Pay in Cash
Often, utilization shoots up due to a large purchase. To avoid this, try paying cash in these situations.
Consolidate Debt – Another option at your disposal is transferring your debt to another lender. If you do this with a credit card, your utilization will fall instantly. Additionally, you will likely receive a lower interest rate and end up paying less every month.
Step #3: Get Ahead of Your Bills
You can do this in four easy ways.
• Pay Past Due Bills
If you have any outstanding debt, you need to pay it as quickly as possible.
Make a Budget – Consider making a budget to get a clear idea of how much you’re spending and where that money is going.
• Curb Overspending
Once you know where your spending issues are, do your best to cut costs in those areas. This will give you more money at the end of the month.
• Set Up Reminders
Once you have surplus money every month, you should focus on never accidentally missing a payment. To do so, set up reminders or autopay for your monthly bill.
As you now know, you can improve credit score quickly without breaking a sweat. As long as you follow the 3 easy steps on this list, you’ll raise your score in no time. In fact, you even may find that you gain at least 100 points, which is a significant bump. This effect is especially strong for those that have low scores to begin with. No matter what, adopting the habits in this article will set you up for a bright financial future.
