A high credit score is hard to come by especially when you have had bad credit for the most of your life. A good credit score increases the chances of qualifying for loans. But, here is the best part – a good credit score gives you access to low-interest loans which is something you don’t get access to with bad credit.
Without having to fill a CRA payroll remittance form and by adding about 100 points to your credit score, you will be on your way to an affordable home and a cheaper car loan.
So, how can you improve your credit score?
- Get the errors on your credit report knocked off
You may have a bad credit report but having errors in your report could be the reason for your low credit score on your credit report. With the Federal Trade Commission reporting that 1 in every 4 reports has errors that affect credit score negatively, you might want to have the errors fixed, if any.
At the same time, the commission also reports that 5 percent of consumers have errors on their reports and the errors leave consumers with a higher price for insurance and financial products.
To know if your report has errors, you could request your credit report annually from the major credit bureaus. Once you receive the report, go through every little detail in the report. In case of errors like payments made on time but reported as late, you should dispute the errors for their removal.
Note that the credit bureaus are to respond to the disputes within 30 days after which you can work on improving your credit score.
If you are on the market for a mortgage, then you could apply for a rapid re-scoring to correct the error in your report. For this, the lender is the one who reaches out to the credit bureau on your behalf, with documentation showing the error in your report. Your score gets updated immediately.
- Get on top of payments
For points on your credit score, you need to deal with your past bills that are due to bump up your points. This is an important step because your payment history has the biggest effect on your credit score.
You might want to call your creditor if you are behind on your payments and you could also ask them to rescind reported delinquencies so that they don’t appear on your report.
You could also set up payment reminders if you keep forgetting payments making them later than you should.
- You have to stay under your credit limit
Besides late payments, your credit utilization, which also refers to the amount of your credit limit you use will impact your credit score. For a good credit score, don’t exceed 30 percent of your credit limit.
You can manage your credit limit by tackling the highest credit card balances first. You could also ask for a credit limit increase to lower your utilization, and you could also make small payments (micropayments during the month to keep your balances down. To stay under your credit limit, you might want to move credit through debt consolidation.
Piggybacking is common with couples. It is a credit score boosting hack whereby one individual with excellent credit permits the other person with bad/ thin credit to be added as an authorized user on the credit account (credit card)
- Swapping bad for good debt
If your credit card debt is the bad debt weighing down your credit score, it is called revolving debt. To improve your credit score, convert the bad debt into good debt, also called installment debt – this is a less risky debt, and it will boost your credit score.
Lastly, don’t hint that you are about to take a risk. If you start missing payments out of the blue and if you suddenly pay less than you do, you will indirectly hurt your credit score.