How to Fix Your Credit Score in 6 Months
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A bad credit score can make it tough to get approved for loans or credit cards, but there are steps you can take to improve your credit score. This blog post will show you how to fix your credit score in 6 months.
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Check your credit report for errors
The first step is to get a copy of your credit report from all three credit reporting agencies — Equifax, TransUnion, and Experian. You’re entitled to one free report from each per year. You can get them by visiting www.annualcreditreport.com or by calling 1-877-322-8228.
Once you have your reports, go through them carefully to look for any errors. If you see something that looks like a mistake, such as a late payment that you actually made on time, you can dispute the error with the credit bureau.
If you have a lot of debt — especially if it’s high-interest debt — you may want to consider consolidating your debt with a personal loan or balance transfer credit card. By consolidating your debt, you may be able to get a lower interest rate and save money on monthly payments.
Dispute any errors you find
The first step is to order a free copy of your credit report from each of the three credit bureaus—TransUnion®, Experian®, and Equifax®. Make sure to do this six to eight weeks before you start applying for loans, so you have enough time to dispute any errors you find and give your score a boost.
When you get your report, look through it carefully to identify any inaccuracies. If you see anything that’s not accurate, get in touch with the creditor or the bureau right away and ask them to fix it.
If you have a lot of errors on your credit report, it could bring your credit score down significantly. So it’s important to get them fixed as soon as possible.
Lower your credit utilization rate
Cutting your credit utilization rate is one of the most effective ways to improve your credit score.
Your credit utilization rate is the amount of debt you have divided by the amount of available credit you have. For example, if you have a $1,000 balance on a credit card with a $5,000 limit, your credit utilization rate would be 20%.
Ideally, you should keep your credit utilization rate below 30%. The lower it is, the better it will impact your credit score.
You can lower your credit utilization rate by paying down your debt or by increasing your credit limits. If you have good payment history and a high income, you may be able to get a higher limit by asking your card issuer for a limit increase.
If you have a friend or family member with good credit, ask them to add you as an authorized user on their credit card. As an authorized user, you’ll get your own card that you can use to make purchases. The account will show up on your credit report, and the payments will be factored into your credit score.
Making on-time payments is one of the most important things you can do to improve your credit score. By becoming an authorized user, you can Piggyback off of another person’s good payment history and give your score an instant boost.
Just make sure that the person whose account you’re added to pays their bill on time every month. If they don’t, it couldreflect negatively on your credit report and cancel out the benefit of being an authorized user.
Get a secured credit card
Start by getting a secured credit card. This is a credit card that is backed by a cash deposit you make when you open the account. The deposit is typically equal to your credit limit, so if you deposit $500, you’ll have a $500 credit limit. The card issuer holds onto your deposit while you use the card and reports your activity to the credit bureaus, which helps build your credit history. You can usually get a secured card even if you have bad credit.
To get a secured card, simply fill out an application with a bank or credit union. Be sure to shop around for the best deal — just like with any other type of credit — and keep an eye out for annual fees and other add-ons that can drive up the cost of your secured card.
Take out a small loan from a credit union
One way to improve your credit score is to take out a small loan from a credit union. This will help improve your credit mix, which is one of the factors that determines your credit score. Make sure you make all of your payments on time, and pay off the loan in full within six months.
