Credit scores are a big deal. A credit score is a number between 300 and 800 that is used to determine your “creditworthiness,” or how likely you are to repay your debts. They play a huge role in determining whether or not lenders will give you loans, approve mortgages, or increase your credit line. But what can you do to improve your credit score if it isn’t as good as it could be?
Don’t worry, with these tips, you can begin to improve your credit score in just a few weeks.
How to improve your credit score
1. Review your score
It might be a bit nerve-wracking at first, but if you don’t know what your baseline is, it’s tough to plan how to improve it. The good news is that it’s pretty easy to review your credit score.
Try opening your online or mobile banking and see if it has your report available there. If you’re not able to find it easily, you can always use a reputable free service to get an idea of your score. Many reputable services will even send you a report up to four times a year, so take advantage!
Once you’ve got your number, figure out where you fall on the credit score spectrum:
- 800-720 → Excellent!
- 690-719 → Good
- 630-689 → Okay
- 629 and below → Not so okay
If you’re not quite in the “Excellent” range, don’t worry — lenders and creditors won’t necessarily deny you for a less-than-perfect score. Plus, we’re here to help you learn how to improve your credit score.
2. Find out your derogatory remarks
Before you make a plan to improve your credit score, you first need to figure out exactly what’s brought you down in the first place. You’ll be able to find out these details in the “derogatory remarks” section.
Look for collections in your name, missed or late payments, and possible errors. All of these can be amended to improve your credit score, and it’s particularly important to review any mistakes — they could indicate that you’ve been a victim of identity theft or credit card fraud!
3. Make a payment plan
Do you have collection agencies harassing you? Depending on your personal situation, you may want to consider if paying the collection agency or the direct company is in your best interest.
In some cases, you may be able to pay only part of the debt if you opt to pay off the collection agency. While this may save you money, it won’t remove the derogatory mark from your credit report.
However, if you pay the company directly and in full, you may be able to remove that mark from your credit report altogether. There’s no one-size-fits-all answer to this dilemma, so just make sure to weigh the pros and cons before making a decision.
4. Put yourself up for credit adoption (sort of)
Do you have a parent, sibling, or partner who has excellent credit and always makes their payments on time? One way to improve your credit fast is to ask them to associate you with their accounts.
To do this, they simply add you to the account, not as a cosigner — this means you won’t get a card associated with the account or anything like that. But by having your name associated with an account that is always paid on time, you can improve your credit score painlessly and fast.
Be careful who you ask, though — if the account holder begins to miss payments, this will also hurt you.
5. Automize regular monthly payments to lower your credit card utilization
This seems simple enough, but it’s vital to your overall score — make your payments regularly and on time. If possible, don’t make the minimum payments.
If you only ever make minimum payments, chances are that you will be stuck paying interest on your original purchases for years to come. When you make regular, timely payments, credit card companies learn that you are a trustworthy customer, and you can greatly improve your credit score.
To take the thought-work out of remembering to pay your bills on time, automize your payments with a recurring monthly transfer through your online payments. After just fifteen minutes of programming this, you can rest assured for months to come that you are still actively improving your score.
If you use these tips, you can begin improving your credit score within just a few weeks. While repairing a very low score might take time, don’t worry: once you’ve formed the right habits, it will be a painless transition.
Just remember, if you don’t maintain these good credit card practices, your score will decrease again. For more ideas on how to improve your financial fitness, check out the rest of the Academy library!