A credit score that’s gradually sagging towards the bottom is not ideal for any income earner. If your credit score is suffering, you should immediately take the necessary steps to improve it before the situation gets worse. That’s easier said than done, however. Maintaining a high credit score takes a lot of effort. It can also take time if you are not committed. In case you want to improve your credit score as soon as possible, here are several tried and tested suggestions:
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Check Your Credit Report
You are entitled by law to a free credit report annually from TransUnion, Experian, or Equifax, whichever you work with. Do request this credit report and once you have it, check it field by field. Credit reporting companies are known for making errors in credit score reports. If you don’t examine your report carefully, you might miss these errors. Your low credit score could be caused by a silly error that can be easily fixed. In particular, check all unpaid balanced to make sure that each is, in fact, unpaid. Sometimes, fully paid debts might show up as unpaid in credit reports. You can also opt for one of the many legitimate credit monitoring services that assist subscribers to detect errors in their credit reports. Complete this step first and then proceed to other ways you can improve your credit score fast.
Start Paying Down the Remaining Balance
Close to one-third of your credit score is calculated based on the amount of debt you owe, according to FICO’s consumer division. The other factor that determines the score is credit utilization ratio. It’s calculated based on the amount you owe and your remaining credit. People with high credit scores have a credit utilization rate of 30 percent or less. The easiest and quickest way to manage a healthy credit utilization level is to pay down the amount you owe. You don’t have to pay it all back at once. Start making payments, even small payments, to bring down the overall balance. Pay at least slightly above the monthly minimum required to improve your utilization rate faster.
Pay More than Once a Month
It makes sense to make a monthly payment to your credit card company. But this can negatively affect the credit utilization rate mentioned above. For example, if you max out $1,000 on your credit card and make a $1,000 monthly payment, this amounts to 100 percent credit utilization. This does not bear well on your credit score. Therefore, pay more than once per month to improve your score as fast as possible. You can break down payments, but it’s best to make an additional payment each month. You can find out how well this method works by signing up for a free credit score monitoring service.
Up the Credit Limit
There’s one proven technique to improve the credit score without necessarily eliminating the debt. That is by increasing the credit limit. This improves the available credit you have, which decreases the credit utilization ratio. When that happens your credit score would naturally increase. You will have to call up the creditor and make this a special request. But do keep in mind not to use the extra credit you get. For example, if you increase the credit limit from $1,000 to $2,000, don’t start spending $2,000 because that would negate the purpose of getting that limit increase.
A bad credit score will affect your life in many ways. It will become difficult to obtain essential loans and your employer could use it against you. Therefore, use the above suggestions to improve your credit score without delay.
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