Raising your credit score may seem very difficult, but with the right steps and some patience, it’s totally achievable. Keeping a credit score of 750 will allow you to get better loans, higher limits, and even lower the cost of your insurance. To begin with, I didn’t have a good credit score at all, but with persistent efforts and a planned approach, I managed to raise it to a decent 750.
Achieving a good credit score means understanding how it operates. With that aside, there are a few factors that determine your credit score. The first one is your payment history. The second one is how much credit has been used. The third one is how long you’ve been using credit. Don’t worry; these can be fixed.
In this article, I’ll teach you 12 steps, I followed to raise my credit rating. From credit report error correction to credit limit negotiations, these tips are everything you need to gain control of your debt.
Whether you are attempting to build your credit history from the ground up or whether you wish to recover from past mistakes, these strategies are sure to help you improve your credit. Let’s get to the point and hope for a score above 750.
Here are 12 tips to Improve Your Credit Score
1. Check Your Credit Reports
For you to have a healthy credit score for a particular period, you must assess your credit report.
The history of your financial activities is maintained by the three major credit bureaus: Equifax, Experian, and TransUnion. Reviewing these reports is essential because even small errors can negatively impact your score.
Take the first step by requesting your report from all three bureaus. In most countries, authorized partners such as AnnualCreditReport enable you to request one free report per r bureau each year.
The careful analysis of your report allows you to check for errors such as wrong personal identification information, incorrectly tagged accounts, or incorrect payment statuses.
If you spot even minute mistakes on your report, they can damage your credit score, so it is wise to file an argument with the bureau that has made a mistake.
You need to attach the documentation as well as properly explain what information is in error. Federal laws state that the bureau must conduct a search and usually reply within a finite 30 days.
The determination of mistakes and their editing allows you to remove some negative points to an extent and display the reality of your credit score.
2. Identify Areas for Improvement
After going through the report, the next logical step would be to figure out how to identify areas that need improvement. The first thing you should do is to look for patterns or anything else in the report that might signal a decrement in your score.
These include Accounts that have been subject to late payments, professional counseling for debts, being overcharged on credit usage, and so on.
For example, if one of the problems is late payments, you need to start paying the bills on time. And if your credit utilization is high, you need to either repay the debts on your credit cards or simply abstain from using them until the amount is manageable.
You also need to study the loan accounts that you have. If, for instance, you have credit cards, loans, and even mortgages then your score will get impacted positively.
When you determine what your vulnerabilities are, you will know exactly what to concentrate on. This step allows you to design a specific plan of action to enhance the situation in terms of debt payment, debt settlement, or even your spending pattern.
3. Address Your Late Payments
Settling payments on time can significantly boost your credit score because your payment history is among the factors that are highly considered when computing your credit score. Late payments can remain on your report for up to seven years although the quicker they’re rectified the lower the negative effects on your credit report.
You should first locate all your accounts that are overdue for payments. These include credit cards, loans, etc. It’s important to get in touch with your creditors as well to seek their understanding. Most creditors are quite accommodating especially if you have a record of dependable performance.
Come up with a feasible repayment plan which will help you stay within your financial means First, try to negotiate for a shorter time frame suitable to you. Once agreements have been reached, you must adhere to them to avoid appearing noncommittal.
If you believe that the late payment should be paid once due to a mistake and hardship, you have the option of asking for an adjustment as a gesture of goodwill. Writing the creditor an explanation letter politely and telling them about the unfortunate situation together with the desire to wash off the late payment blemish from your record helps a lot.
4. Get Added as an Authorized User
Becoming an authorized user of another person’s credit account is a simple and clever way to increase your credit score. For an authorized user, the favorable credit activities by the actual account holder will be embedded in the credit reports that were compiled to augment your credit history.
The first step is to find a good friend or a really trustworthy relative with some stellar credit and responsible financial habits. This person’s credit account must have a long history of payments being made on time and have a low rate of credit utilization. Ask him/her if they can put you as an authorized user on his credit account. Make it clear that you are not going to use his credit card because just being added to that account is enough to benefit your credit.
Once that happens, that good history should then probably show up on your report in a month or two. It is also a better score brighter feature that increases the average ages of your accounts while improving your payment history.
However, it is very important to maintain a good relationship with the primary account holder since each of their credit actions has effects on your credit report.
5. Clear outstanding Collections accounts
Rebuilding your credit is crucial to address overdue accounts. Accounts go into collections when a borrower fails to pay their debt for a long time and the original creditor sends the debt to a collection agency. A collection account is the most damaging to your credit rating, so it is crucial that you take care of them.
Credit bureaus make available credit reports free of charge. Check the reports for unpaid child support accounts. Make a note copy of all outstanding debts, including the debt collection company that has been hired and the original creditor. Now, get in touch with the debt collection agency and verify the account balance as well as discuss some possible solutions regarding it.
In case you find full payment of the balance difficult, shorter payment alternatives for the debt can also be pursued. If you intend to instead make partial payments, ask the agency in writing for that assurance before making the payment.
After making a payment, it may be possible to request an agency to delete the unpaid inquiry records from a credit report. While some agencies are likely to deny this request, it is of help to make such a request.
Settlement of unpaid debts shows your willingness to get rid of past financial problems. Gradually, this action may facilitate the elimination of negative information from history and improve the general rating.
6. Open a Secured Card
Getting a secured credit card is also a good way to start building or rebuilding your credit history.
Secured credit cards are what their name implies cards operate just like a normal credit card but come with a collateral deposit. This deposit is that which serves as your credit limit and provides lenders some safety in case a payment is missed.
Start by going through banks or credit card issuers that give secured cards with low fees and reasonable deposit amounts. Once approved, you’ll need to pay a deposit that you will keep on able account status or change to an unsecured card afterward.
Use the secured card as intended: make a few small purchases and pay off your balance in full each month. This is what is expected of any financially responsible consumer, and as a bonus, they do not incur interest for carrying a balance. Eventually, consistent on-time payments will be reported on your behalf to the credit bureaus: another step in improving your credit score.
Do not use more than 30% of your credit line at any point in time instead. With responsible use, a secured card will give you the avenue to build better credit opportunities and higher scores.
7. Increase your Credit Limits
If you want to increase your credit score, you need to simply lower your credit utilization ratio. Credit utilization refers to the percentage of your borrowing capacity that you are using at present and is a major influence in credit scoring. In an ideal situation, this ratio sets a benchmark of 30% below the ideal impact on your score.
Start a campaign for increasing your credit limit by contacting the issuer of your credit card. You can do this through the issuer’s website, mobile app, or customer service hotline. Before asking for this, make sure your account is in good shape.
When you eventually get to speak to your credit card issuer, highlight all things that would be considered good factors affecting your credit history, like a good, long history of on-time payments, income increases, and generally responsible credit use.
Some issuers grant automatic increases, while others may require a credit check opening the chance for a temporary decrease in the score.
Once your limit has been increased, it is a good idea to avoid slipping into greater spending. Remember, the aim is to lower your credit utilization ratio, not to increase your debt. For instance, if your limit increases from $3,000 to $5,000, keeping the balance below $1,500 will be highly beneficial to your ratio. This little change would result with time in a very noticeable improvement of your credit score.
8. Automate Payments
Another simple yet very effective way to improve your credit score is automating your payments. Payment history is the most part of credit scoring with 35% of the entire score. Naturally, having a missed payment can cause many irreversible impacts, so keep all your bills up to date.
It might help to get a complete list of all your bills-from credit card and loan payments to all the utilities or other regular payments you need to make during your life.
Most banks, credit card issuers, and service providers have either a well-publicized website or mobile app that can be used to set automatic payment options. One can choose full, minimum, or specific monthly payment amounts depending on available resources.
Payments will be simplified by having them automated, no due dates will be missed anymore and costly late fees or damaged credit scores will be avoided. It makes finances less of a throb as you only have to keep track of just a few of the due dates.
Always leave some funds in your bank account to fulfill the automated processing of payments. For one, it can incur overdraft fees when there are not enough funds. Always also ensure to check your accounts, so everything is fine.
9. Report Your Utility Payments
You should know that utility bills like your electric, water, and telephone bills cannot be listed on your credit report. However, by incorporating it, you will be able to show how consistent you have been with these payments.
You need to find services such as Experian Boost or some other company that does something similar and helps report utility payments to all of the major bureaus. This allows you to attach your bank account or utility accounts to enable tracking or reporting of on-time payments.
This service will require enrolling you and scanning your payment history for qualifying accounts, which may include utilities, phone bills, or even streaming subscriptions, and reporting them to your credit file. Since payment history majorly influences your credit score, it might just have a very positive effect on your score, considering that your bills have been paid on time.
Unfortunately, not every utility payment is often considered by specific bureaus or scoring models. But bad reporting of late payments can spoil your credit.
10. Limit New Credit Card Applications
Whenever a new application is received, a lender might make a hard inquiry on the credit report. While one or two inquiries may have a minimal impact, multiple inquiries within a short period can signal financial instability to lenders and lower your score.
Before you want to apply for a card, think about the reasons you want it. If it’s to establish some credit or perhaps to earn some rewards, see if the rewards are worth any potential downside. Research cards carefully to find one that can be useful to you.
You don’t need to waste your time applying for a card you might end up not qualifying for.
If you are actively engaged in the process of improving your credit, you will need to put more emphasis on your performance with available accounts. Pay your bills on time, lower balances, and avoid overspending credit. These activities will strengthen your credit profile without the need for opening new accounts.
11. Maintain Your Oldest Account
Retaining your oldest credit account is a key process for having a healthy credit score. The age of your credit history counts for 15% of the entire score, and the age of the oldest account will weigh heavily on that. This can, however, lead to a shortening of your credit history and by extension a possible lower score.
Keep any credit card or account you opened years back active regardless of using it sometimes. Its long-lived nature sends a signal to or creates an impression for lenders that you have managed credit well over time. To maintain it without incurring unwarranted costs, you can use it to run very small purchases and pay up its monthly dues in full, avoiding interest charges.
The only reason you should close your old account is if it incurs huge fees or terms that are not productive for you. Even then, you need to carefully consider your options before you close it.
12. Negotiate Lower Interest Rates
Reducing the costs of debt is an extremely vital approach to managing one’s finances and prepping for the future. In the world of finance, you can negotiate better rates for credit cards. This is of course only applicable if your credit history allows it, having better rates would allow you to pay off your credit card debts a lot faster.
Before you begin, make sure to have taken the opportunity to collect and outline all the necessary documentation that would allow you to make your case strong, from payment history to credit scores, anything that would let your lender know how viable a candidate you are would be essential.
On a simple phone call to your approved lenders, contact the customer service department and ensure to calmly explain the situation while highlighting how you have been a dedicated lender and have a clean credit history.
If the first representative starts declining your request, be persistent to keep calling, or simply ask to speak to a supervisor for being a responsible cardholder will provide an edge.
In all honesty, this restructuring of negotiations and rates will allow for smoother transitions in finances, and will further enable you to utilize a better approach towards paying your debts off over the long term.
Conclusion
You may feel like it is impossible to increase your credit score at first, however, if you follow this plan, you will be able to take charge of your finances and accomplish your goals. This can include answering your credit reports, getting rid of late charges, or working to lower your interest rate. Every effort you put in advances you in moving towards a better and more secure credit experience.
It takes time, patience, and good financial behavior to gradually work one’s self up to a credit score of 750. Focus on making progress rather than perfection instead because, every effort counts, for example streamlining payments, or changing your credit to a diverse profile can change the ball game.
Not only are you increasing your credit score by following these rules but you are also preparing yourself for better financial prospects in the future. All of your efforts are justified as applying for future loans will be easier in the future or acquiring lower interest rates will be possible due to your credit score.
Aim for small goals every day. Remember it is important to appreciate yourself and keep motivating yourself to work harder for greater goals. Your credit score will improve in due time if you keep working towards your goals.
