Good credit ratings are key when going through major financial milestones like buying a car or a home. But a bad credit score can prevent you from getting loans and even a roof over your head. This is because many landlords ask for credit scores before renting out their property.
So, if you have a low credit score that can hinder financial access, it’s best to get it fixed as soon as possible. Keep reading for 8 great tips you can use to fix credit fast.
1. Check Your Credit Rating
Many people are shocked and confused when they receive a low credit score. This is often due to incorrect information posted to credit bureaus. For instance, someone may have stolen their identity, taken out credit and defaulted on payments.
The first key to fixing your credit is to take responsibility for your finances by checking your credit rating. The sooner you face your financial situation the faster you can fix bad credit. You get one free credit report a year, so take advantage of this.
Checking your rating annually allows you to correct any wrong information in good time. Experian (one of the main credit bureaus) also has a free facility that will alert you whenever there is a change on your credit file. This allows you to dispute any unauthorized charges.
2. Dispute Wrong Information on Your Credit Files
You should contact the credit bureaus to dispute this information as soon as you notice any incorrect information on your credit report. It’s free to dispute entries in your credit file but it may take about 30 days to conclude an investigation.
If the investigation is in your favor it may take a few more days for the bureaus to repair your credit. This is why it is important to regularly check your credit rating. You’ll be able to catch a low credit score and act on it sooner.
3. Fix Your Payment Habits
The main thing that negatively affects credit ratings is defaulting on payments. Late payments and missed payments reduce your score slightly. But collections and bankruptcy notices can deal a major blow to your credit score.
To make matters worse, these reports stay on your credit file and negatively affect your credit score for 7 to 10 years. If you have missed loan payments, improve this by immediately making regular payments on your outstanding debt. Bringing your accounts up to date as well as a few months of regular payments will go a long way to fixing your rating.
You can also go through the process to remove late payments from your report. This will boost your credit score after the adjustments are updated and reported.
4. Reduce Your Credit Utilization Rate
A credit utilization rate is basically how much you’ve used up the credit available to you. If the credit bureaus establish that you can borrow up to $10,000 and you already have $9,000 worth of debt, your credit utilization rate is 90%. The rule of thumb is that the lower your credit utilization is, the better your credit score.
Financial advisors suggest that you keep your credit utilization rate below 30%. If your utilization rate is high you can reduce it by either paying down your debt or applying for an increase on your credit limits. Only follow these strategies if you know you won’t spend more once you get a higher credit limit.
5. Consolidate Your Debts
Having several unpaid accounts can damage your credit rating. It’s a good idea to take out a loan or get a balance transfer card to pay off several small debts. A balance transfer card will allow you to pay off the balances on the small debts. After that, you’ll get a few months of interest-free payments on your balance.
Personal loans, on the other hand, won’t show up on your credit utilization. So they are also a great option if you can get a low-interest rate.
6. Maintain a Credit History
Once you pay up your credit cards, consider keeping them open but unused. Why?
Firstly, each card shows your credit history. The longer you have a credit account the better for your credit file. Having open yet unused credit card accounts also increases your credit utilization rate.
The credit card accounts will also show up as paid-up current accounts on your file. All these strategies increase your overall credit rating. Of course, if you are afraid you will use credit cards and get into debt again, it is better to close the accounts.
7. Be Careful with New Credit
Another way to prevent your credit rating from falling is to avoid taking out several new loans. Taking out several new credit cards or loans in a short time will make you uncreditworthy to lenders. The inquiries for credit checks will also show up on your report and too many can negatively affect your score.
8. Seek Help
If all the above seems overwhelming and you don’t know where to start, get some advice from a reputable credit counseling agency. Some provide free debt management counseling that can help you come up with a credit restoration plan. You can get more information on choosing the right counselor by checking out the information on the National Foundation for Credit Counseling website.
Also, if you have some cash to spare, you can hire a credit repair agent to help you fix your credit. Credit repair companies fix your rating primarily by disputing any incorrect information on your credit file and getting these taken out. The company may charge you a monthly fee for each completed task or a flat rate.
Please note that following the Credit Repair Organizations Act, credit repair companies should only take payment once they deliver the services promised in your contract with them.
Learn How to Fix Credit Fast
Unfortunately, there is no quick way to fix credit. But there are some actions you can immediately take to improve your credit rating. And when you’re consistently doing the right things, you’ll see your credit score shoot up.
The first is to check your credit score regularly and dispute any incorrect information on your file. You must also improve your payments history and reduce your credit utilization rate. If you’re looking for help to raise your credit score, contact us today.
