Are you in need of a quick credit fix for your subpar credit?
It can be hard to build solid credit, especially if you are just starting out with your finances. Your credit can dip unexpectedly even after one missed or late bill payment.
Good credit is also necessary for getting your first mortgage and buying that new car you need to get from home to work. Sometimes you just need to have that competitive credit score, and now!
So, what can you do today to boost your credit score? Read on to learn more about what you can do right now to send those numbers climbing.
Great Ways to Get a Quick Credit Fix
#1. Get the Lowdown on How Credit Works
The first and most important step toward getting a quick credit fix is to understand what credit is all about. Knowledge really is power, and wrapping your head around what makes a good credit score can actually help you plan for a higher score in the future.
Your credit is a score you receive from a credit bureau on the scale of 300 to 850. 850 is the highest (and best) credit score you can achieve.
Credit bureaus like Experian give you this score based off of a number of things. These include the number of accounts you have open, including credit cards, auto and personal loans, and mortgages.
You can actually build good credit by having a lot of accounts open and regularly making payments. People with high credit use credit cards responsibly, have several long term accounts, and use just the right amount of their credit limits.
Your credit score will dip if you have too high of a balance on your cards, miss a payment, accrue lots of interest, get a credit check, and/or fail to pay your bills.
#2. Adjust Your Credit Utilization
The first concrete step towards a quick credit fix is analyzing how much of your credit card limits you are actually using. This is called your credit utilization.
Inspect Each Card
In general, you want to keep your balances on credit cards at around thirty percent of your credit limit.
That means that if you have a credit limit of $1,000 on a card, you want to keep a balance of around $300 per billing cycle–and, of course, you want to pay this off every cycle if possible.
If you do carry a balance, make sure that the balance does not go beyond thirty percent.
Go through all of your credit cards and figure out how much credit you are using per card. Once you have these percentages down, do one of the following.
Increase Credit Limits On Your Cards
Increasing the credit limit on your credit cards will effectively lower your credit utilization for that card.
For example, let’s say that you have a $500 balance on a credit card with a $1,000 credit limit. This balance is at a fifty percent credit utilization.
Increasing the credit limit to $1500 means that your balance is only taking up roughly thirty-three percent of the credit limit. This can give you the credit fix you need.
Reduce Your Debt
Another way you can adjust your credit utilization is to pay off just the right amount of debt to get you to that thirty percent.
This is of course an option if you have the funds to spare.
Let’s go back to the $500 balance on the $1,000 credit limit card. You would have to pay $200 of this balance to achieve that thirty percent utilization.
Even if you can reduce your debt across accounts by a little bit, you’ll be getting your credit score closer to where it needs to be.
#3. Avoid Opening New Accounts & Consolidating Debt
Some people think that they can just get a new credit card with a new credit limit to take care of things.
But this can actually harm your credit score further. Avoid opening any new accounts at this time, if possible.
Also stay away from consolidating debt in the form of balance transfers or taking personal loans. Balance transfers, especially frequent ones, can tank your score further.
Lastly, keep your current accounts open. Closing them won’t make the debt go away. It actually can harm your credit score further.
#4. Inspect Your Credit Report
You are entitled to one free credit report from a reporting bureau each year. This report details the accounts you have open, your current debt, and your credit score.
It also includes rental and leasing information if reported, so always keep track of your rent payments for housing and office space. (Learn more about renting office space in Chicago!)
These reports sometimes have errors. Take a close look at your report to see if any mistakes arise.
One thing to look out for is negative financial situations, such as bankruptcy or debt collection.
These are officially wiped from your credit report after seven years.
If you do catch any errors, file a dispute with the credit bureau and receive your corrected report.
#5. Catch Up On Minimum Payments
You don’t have to pay off all of your debt in one go. For many people, this simply is not possible.
But you can catch up on any late or missed payments. You don’t even have to pay the full payments. Paying the minimum payments for your credit card balances on time can go a long way in giving you a quick credit fix.
Catch up on these minimum payments and stay on top of these in the billing cycles to come.
#6. Plan For the Future
The best credit fix doesn’t happen overnight. It’s possible to jump your score in a variety of ways, but you can send it soaring by taking the time and planning for the future.
What does that look like? Consider working with a financial advisor to set up a financial management plan. Accountants may seem like they cost a lot of money, but they can actually help you save in the long run.
Set up payment reminders for your credit cards to make sure you pay bills on time.
Avoid accrued interest by keeping a steady credit utilization score. Make sure you are always aware of balances and a budget.
Get Your Credit Fix
Bad credit doesn’t have to keep you from the things you love and need. Get a quick credit fix today by understanding how credit scores work and monitoring your credit utilization.
Hold on to the accounts you have and don’t acquire any new cards. Stay on top of minimum payments and consider talking to a financial advisor to ensure you keep your good credit in the future.
Have experience jumpstarting your credit? We’d love to hear more. Share your thoughts in the comments below.
Or learn more about ways you can easily earn money online in order to tackle your debt and get that credit score of your dreams.