Credit is a very useful tool for people around the country.
Some use it buy houses and cars, some use it to buy everyday items, and some people even use credit to start businesses or secure a loan.
Credit allows people to get things that they normally couldn’t afford and offers an opportunity for those who don’t have money saved up.
But using credit can lead to debt, which can lead to an increasing number of financial worries. If you miss a few payments and build up debt, this can cause your credit score to plummet. This can make it hard to secure a loan, open a bank account, and it can even prevent you from getting housing.
But never fear! In this article, we’ll go over how to raise your credit score in 30 days and get your life back on track.
How to Raise Your Credit Score in 30 Days
If your credit score is low and you need to raise it in a short amount of time, there are a few steps you can take to quickly bring up your credit score.
These steps involve paying off debt, decreasing your credit utilization ratio, and improving your credit by using it correctly.
#1. Pay Off Some Debt
One of the main ways that creditors assess your credit rating is by looking at your credit utilization ratio. Up to 30% of your score is based on your credit utilization ratio, so it has a big impact on your credit rating. Your credit utilization ratio is the percentage of credit you are using compared to the amount of credit available to you.
For example, if you have a credit card with a $10,000 limit and you have a balance of $5,000 on that credit card, your credit utilization ratio would be 50%. If you have a $10,000 balance on a $10,000 limit credit card, your credit utilization ratio would be 100%.
According to creditors like Experian, the ideal credit utilization rate is around 30%. This is because this shows that you are using your credit but are also able to pay off the balance each month, which is a good sign to creditors.
If you can get your credit utilization ratio below 30%, your credit score should increase as a result.
#2. Increase Your Credit Limit
It might seem counterintuitive, but raising your credit limit can actually improve your credit score. This is because your credit utilization ratio looks at the total amount of credit available to you across all of your accounts, and if you raise your credit, your ratio will go down.
For example, if you had two credit cards, each with a $10,000 limit, you would have a total line of credit worth $20,000. If you had a $5,000 balance on each card, you would have a credit utilization ratio of 50%, because you have $10,000 worth of debt total and a $20,000 credit limit.
Now if you were to raise your total credit limit by $10,000, that would mean you would have a total credit line of $30,000, with $10,000 worth of debt total. That makes your new credit utilization rate 33% rather than 50% without a dollar spent!
If you have multiple credit accounts, make sure to talk to each of your creditors about raising your credit limit. Even if one creditor doesn’t agree, others might and this will still bring down your credit utilization ratio.
#3. Remove Collections Accounts
If you’ve missed a number of payments on an account, it might get sent to a collection’s agency. This has a serious effect on credit score and can affect it for years to come. The worst part is, even if you pay off the collections account, it will still appear on your record and won’t improve your credit score!
If your account was sent to collections, the best way to handle it is to call the collections agency and negotiate a “pay for delete” request. This deletes the collections account after receiving payment.
Make sure to get this request in writing so that there is written proof the collections agency agreed to delete your account upon payment.
#4. Use Credit to Get Credit
A great way to increase your credit score is to utilize your credit in a way that shows your creditors you are making regular payments. If you only have one credit account open, open a second credit account, such as a secured card that reports to the different credit agencies.
Not only will this increase your credit limit, but it will give you an account to make regular payments on. Only spend a little on this account each month so you can pay off the balance, showing your creditors regular payments and increasing your score.
Make sure not to spend too much on this account, because you don’t want it to go over that 30% usage rate.
Another great way to improve your credit score quickly is to add yourself to secure tradelines. A tradeline is essentially an established account that has good credit, and if you get added to this account, your credit score increases.
For example, if your friend or family member rents an apartment and you sign on as a cosigner on that apartment, even if you don’t pay any rent, your credit score will increase as long as the rent is paid.
This works the same way for tradelines. You can either get on a friend or families tradeline and improve your credit, or you can buy one from a company, who will put your money into a trust which will improve your credit.
Time to Improve Your Score
Now that you know more about credit scores and how to raise your credit score in 30 days, you can take the necessary steps to get your credit score up and get your life back on track.
If you have any questions about credit scores or how to improve your credit score, please visit our blog.