When you have a lower credit score than you would like, there might be options to bring it up. You may be able to acquire as many as 100 points fairly easily based on what’s pulling it back.
Scores in the credit score categories of “bad” and “fair” regions may see drastic effects, contributing to greater and more access to loans or credit cards. Here are some strategies you should try:
If you can make small payments during the month – also called micropayments – that can help hold your credit card balances down. Having multiple payments across the month operates on a credit metric called credit utilization has a strong effect on ratings. When you can keep your usage low instead of allowing it to rise into a payment due date, your score will gain automatically.
If your credit limit rises, but your balance remains the same, it will instantly reduce your total credit utilization. Reach out to your credit card issuer and find out whether you can get a higher credit limit.
Bear in mind that this may require a soft, or hard, credit check which may impact your overall credit score.
Dispute credit report errors
An error may be dragging down your score on one of your credit reports. Every one of the three main credit bureaus – Experian, Equifax, and TransUnion – is required to provide you with a free report every 12 months.
Use AnnualCreditReport.com to request those reports and then check them for errors, such as late-marked payments when you paid on time or negative information that is too old for listing. Then, get them removed by disputing those errors. Credit bureaus have 30 days to investigate and respond.
When you’re trying to boost your credit score, be mindful that closing your credit cards will make the task more challenging. Closing a credit card means you forfeit the credit balance on the card when determining the overall credit usage, which will result in a lower score. Keep the card open and periodically use it so that the lender does not lock it.
When you pay late, no plan for bumping up your score will work. Why? Payment history has the single largest impact on credit ratings, and late payments will continue for seven years on the credit reports. If you miss 30 days or more on a payment, call the creditor immediately. Arrange to make up if you can, and inquire that the trustee will accept not disclosing the missing charge to the credit bureaus.
An account is classified as overdue every month will affect your ratings. Luckily, with time the effect of a missed payment disappears. Many positive credit actions after a mistake can help remedy the harm quickly. If you simply cannot pay everything on time, then you know how to prioritize the essentials bills and payments that are due.
To read more on topics like this, check out the Finance category.