Your credit score is important. It determines whether banks are willing to finance you and the terms that you’ll be offered. A good credit score tends to mean great news for your financial future (and your financial past, too). A poor credit score can be a nightmare if you need a loan, a new credit card, or sometimes even to move to a new rental house.
Your FICO score isn’t set in stone, though. Here are ten ways that you can easily begin to repair your credit score.
1. Check Your Report for Mistakes
The very first thing you should always do if you’re looking to improve your credit score is to check over your report. Any inaccuracies could be causing your score to be lower than it should be. Clear those up and you should see your score go up.
2. Get Your Bills Paid Up
If you’re behind on any of your accounts, work hard to get them up to date. Accounts that are behind can really ding up your score.
3. Pay Down Credit Card Balances
If you’ve got high credit card balances, it’s likely that your score is reflecting them. Credit utilization rate, or the percentage of your credit card balance compared to the credit your lenders were willing to let you borrow, makes up a hefty 30% of your score. Balances under 30% of your credit limit are ideal, but lower is even better.
4. Make All Payments on Time
Continue or start to pay on time. Each month that you pay everything on time positively affects your credit score. If you’re in a pickle, do your best to keep your payments under 30 days late, or if that’s not feasible, try to pay as few accounts as possible late.
5. Don’t Open Accounts You Don’t Need
Sometimes people think that having more accounts is better, but that’s not necessarily the case. It’s hard to predict how new accounts will affect your score, so it’s best to stick to only borrowing money or opening credit card accounts when you absolutely need to.
6. Just Wait
While this isn’t a quick method, it is the one that’s guaranteed most effective. It usually takes time with positive payment history to improve your credit score.
7. Keep At it If You’re New at Credit
It can be really frustrating to have done absolutely nothing wrong and still be suffering with a low FICO score, but that’s exactly what happens when you don’t have much credit history. Be sure that you make all payments on time, maintain a good credit mix, and keep your balances low to help your score go up faster.
8. DON’T Close Accounts
Just like opening new accounts, closing accounts can do unexpected things to your credit score. You risk lowering your score by closing out an account. If you need a better score in the near future, don’t close accounts, just pay down the balance.
9. See If You Can Get Erroneous Late Payments Removed
This doesn’t work very often, and it’s a little risky because calling to ask about a late payment can put an inquiry on your credit report, but if you think a late payment on your report was reported in error, call the creditor and see if you can talk them into taking it off your report.
10. Hire a Professional
If all else fails, call your creditors or a credit counselor if you’re having trouble making all your payments on time. Creditors may be willing to make arrangements, and a credit counselor can help you figure out what you need to do to turn it around.
Whatever the reason you have for wanting to improve your score, it is possible. Be patient, keep paying on time, and keep your eyes on the prize. Eventually, you’ll look up and find that your score is right where you need it to be.