If you are trying to save money, but have exhausted all the regular methods, consider working on your credit. Yes, this may seem like two different financial issues, but these two are intertwined. Increasing your credit score from bad to excellent can open up all sorts of financial opportunities for you. This may seem overwhelming, or downright impossible, but it may actually be easier than you think.
Is it Realistic to Try To Improve Your Score by 100 Points?
Yes! If a person’s credit score is low, they more likely they are to achieve that kind of serious increase. Even seemingly insignificant changes can cause large score increases. If you already have a strong credit history, it gets harder to improve your score.
When you are trying to improve your score, you need a way you can keep your eye on it. There are many different types of credit scores. Choose one to keep track of. You can even find a free copy of your credit score online.
Remember that there are no quick, miracle solutions. Repairing your credit only comes with time and effort. While it may take some time to erase the negatives from your credit report, making smart decisions now will help you maintain it in the future.
Here are three easy ways you can significantly boost your credit score:
Have the Errors Removed From Your Report
In addition to the free online score, you are entitled to one free report a year from each of the major credit reporting bureaus: Equifax, TransUnion, and Experian. Even these institutions can make mistakes from time to time.
Around 25% of United States citizens have mistakes on their reports that negatively affect their scores. If you notice a mistake on your report, dispute it. Make sure you follow the instructions closely for disputing claims. Once an error is removed from your credit report, you will see a huge jump in your score.
Pay All of Your Bills On Time
After looking for errors, try to find any accounts that are past due. Payment history counts towards more than a third of your overall score. Keeping all of your accounts up to date is crucial for a healthy credit report.
Late payments stay on credit reports for seven years. Recent delinquencies have a worse affect on your score. Bringing your accounts up to date will not undo the damage of the past, but it will improve your score in the future.
Do Not Reach Your Credit Limit
After payment history, credit utilization has the second largest impact on your credit score. Credit utilization means how close your credit card balance is to reaching your credit limit.
If you have the money, try to pay your credit cards off completely. The good news is, your past credit card utilization does not come into play, only your current level matters. You will not be punished for past mistakes. Once your balances reach a lower level and have been reported to the big three bureaus, you have nothing to worry about. Strive not to go over 30% of your credit limit. If you are unable to pay your cards down that much, pay what you are able to and try not to spend any more. For serious situations of credit card debt, you may want to consider a debt consolidation loan.