Whether you want to save money on loans or just have a more reliable financial picture, fixing your credit score is key. A few simple strategies can help, including on-time payments and keeping credit utilization low.
Lamine Zarrad, founder of credit-building site StellarFi, says the first step is reviewing your credit reports to make sure there are no errors that could be affecting your score.
1. Review Your Credit Reports
It’s important to review your credit reports on a regular basis. This will help you to understand what information lenders see when they pull your credit, and ensure that all of the information is accurate and up-to-date.
Inaccurate information on credit reports can have a big impact on your how to fix my credit score especially if you’re applying for a loan or credit card. Some common errors include closed accounts showing up as open, debts appearing multiple times and incorrect balances.
You can get a free credit report from each of the three major credit reporting bureaus by visiting their websites. Credit reports contain a variety of information including credit accounts, public records (like bankruptcies and foreclosures) and inquiries. Credit reports also include personal information like your name, address, Social Security number and date of birth.
Another way to improve your credit is to sign up for free credit monitoring, which will send you real-time notifications of any changes that might be affecting your score. This can help you avoid falling back into bad spending habits that could undo all your hard work!
2. Pay Your Bills on Time
One of the quickest ways to improve your credit score is to make payments on time. Payment history accounts for 35% of your credit scores, so even a single late payment can damage your score.
Start by making a list of all your bills, including those you pay with cash and those you have on autopay or recurring billing. Then organize those bills into groups based on when they’re due. Having all of your bill due dates in one place can help ensure that you’re not missing payments.
Set aside a day each month to sit down and pay your bills. Put that date on your calendar or consider setting up a recurring reminder in your favorite mobile app to help keep you on track. It may also help to have a budgeting spreadsheet that tracks your expenses and bills. This can be helpful to determine if you can cut back on certain expenses like internet, cable and cell phone service.
3. Don’t Apply for New Credit
Lenders view you as a high-risk borrower if you apply for several new lines of credit in a short period. Many scoring systems also count the number of “hard inquiries,” or requests for credit, on your report; these typically trigger a decrease in your score. However, inquiries made by lenders to monitor your accounts or by credit card issuers for prescreened credit offers don’t count.
Closing a credit card account lowers your score, so it’s best to avoid doing so. Instead, ask for an increase in your credit limit if you need to, but remember to pay down your balances as soon as possible.
Repairing your credit score isn’t an overnight process, especially if you have negative marks such as missed payments or bankruptcies on your record. However, with consistent on-time payments and smart spending habits, you’ll likely see positive results over time. Sign up for free credit monitoring and check your credit scores regularly to keep track of your progress.
4. Keep Your Credit Card Balances Low
Credit utilization accounts for 30% of your credit score and using too much of your available credit can damage it. Paying down balances is an easy way to improve and maintain your credit score. It’s also a good idea to keep an eye on your utilization rates by monitoring your online card statements or setting up alerts through your card issuers.
You can also try to get your credit card limit increased if needed, though it may result in a hard inquiry on your credit report. If you have bad credit, an unsecured personal loan can be used to pay off revolving debt and won’t hurt your credit score.
Rebuilding your credit can be a long process, but it’s worth the effort. To see the best results, pay your bills on time, monitor and work to fix errors on your credit reports, and keep your credit card balances low. Also consider signing up for free credit monitoring to get real-time updates and alerts on your scores, utilization, and more.
