How to fix my credit score in 6 months?
This is the question that’s probably bugging you for quite some time now. And unfortunately, you’re still as clueless as ever.
Fixing your credit card score in just 6 months is never going to be easy but it’s doable. The trick is in knowing the right strategies that can improve your standing quickly. For someone who’s stressed out and frustrated with a poor credit report, this can be an overwhelming and intimidating experience.
To help you get started, here are some of the most effective tips you can use in improving your credit score fast.
Know Where You Stand
Before you start on anything, you should first get an accurate picture of your debt and your credit score. Take out your credit report and carefully read every entry to make sure that all data are accurate. You can check out sites like Crediful for a free credit report from your issuer to start.
Why?
Well, based on the Federal Trade Commission, around 5% of consumers have errors in their reports that are so bad that they get charged higher for an insurance or financial product. If you see any errors in your report, make sure to file a dispute right away and have them removed.
Eliminate small credit card balances
Consider this:
Having a card with an unpaid balance of $45 and another card with a balance of $35 can hurt your credit score more than having the total amount of those two balances on one card. This is because your credit score is affected by how many of your cards have balances.
So, if you have small balances on a number of credit cards, make sure to pay them off first. Once you’re able to eliminate them, choose one or two cards you can stick with for your future transactions.
Pay your bills on time
This is pretty obvious if you think about it.
Your ability to pay your bills on time is your credit score’s most critical part. Unfortunately, it’s also the hardest to increase, particularly in such a short period. In the next 6 months, you have to make sure you don’t make any late payment. The longer you can do on-time payments, the higher your credit score will be.
You should also deal with any past-due bills as soon as possible. You can call your creditor to ask if you are behind on any accounts and be sure to get current with them. Any account that’s marked delinquent can hurt your score.
Put any extra cash to paying your debts
When it comes to your credit score, your payment history isn’t the only thing you have to worry about. The amount of debt you have matters, too. In fact, it constitutes around 30% of your FICO score. It’s a type of credit score lenders typically use to determine a person’s credit risk.
When you pay off your debt, it’s not just your debt level that gets reduced; your credit utilization becomes lower, too. This can create a major bump in your total credit score. So, whenever you have any extra cash, such as getting a bonus from work, set it aside for your debt repayment.
Don’t close your old credit accounts
Another factor that can affect your credit score is the length on your accounts. Even if your accounts have zero balance, avoid closing them.
On the same note, you should also refrain from opening a new credit account. Although a fresh account can create a small bump in your score because of a new credit line, credit inquiries can make you lose 5 to 10 points.
Get multiple forms of credit
Around 10% of your credit score relies on the type of credit you have. This means that opening multiple forms of credit can greatly help. Instead of having just one, having student loans and credit card can help you build credit faster.
There’s just one caveat.
Although opening multiple forms of credit can have a positive effect on your score, obtaining too many credit lines simultaneously can end up damaging your record.
Don’t do anything that could indicate risk
Apart from missing payments, another thing that can create a dent in your credit score is paying less than you’re supposed to. In addition to that, getting cash advances and using your card on things that can indicate future money stress can also negatively affect your score. One good example is paying an attorney for your divorce.
Before using your card, think about the risk it can create first. The last thing you want to happen is to create a risk that could scare your card issuer and your credit score.
Remain under your credit limit
One of the biggest factors in your credit score is your credit utilization. This refers to how much of your credit limit you’re actually using. Ideally, to fix your credit score, you should keep your balances to 30% of your credit limit.
There are a lot of ways you can do that. You can make micro-payments or multiple small payments to keep your credit balance down. You can also ask to increase your credit limit. This will automatically lower your credit utilization.
However, before you actually do that, you should ask your credit card issuer first. Ask if you can have an increase in your credit limit without causing a hard credit inquiry. Remember, inquiries can cause a drop in your score.
See Also: 9 Valuable Credit Card Perks
Conclusion
Let’s face it.
Building a good credit score can take a lot of time and work. It’s not something that can happen overnight or in just weeks.
Although there are ways for you to increase your credit card score in just a few months, you still have to be realistic. Negative credit history can remain for a long time.
Filing for bankruptcy, for example, can weigh your score down for 10 years. If this is your case, you shouldn’t expect your credit score to miraculously improve in a short time. However, with discipline and the right strategies, you can improve your score little by little.
See Also: 4 Ways to Start Building Great Credit