If you have bad credit, it might seem impossible to get out of it. After all, if your score is low and you don’t have enough money in the bank to cover an emergency expense, what can you do? That’s where this guide comes in! We’ll take you through five simple steps to boost your credit score this year and secure your financial future for years to come. Let’s get started!
(1) Pay Your Bills On Time
One of the biggest factors in your credit score is your payment history—or whether you pay your bills on time. So, if you’re looking to boost your credit score this year, one of the best things you can do is make sure you’re paying all your bills on time. You can set up automatic payments for some bills so you don’t have to worry about forgetting, and for others, just make sure you put them on your calendar and set a reminder. If you want to know more about how you can boost your credit score, give us a call!
(2) Avoid Late Payments
One of the biggest factors in your credit score is your payment history—specifically, whether you pay your bills on time. Late payments can stay on your credit report for up to seven years, so it’s important to avoid them if you want to improve your credit score. You can set up automatic payments for your bills so you never have to worry about forgetting to pay a bill again. If you do miss a payment, call your creditor immediately and explain the situation. They may be willing to work with you, or they may remove the late payment from your credit report altogether. Avoid Debt: The less debt you have, the better off your credit score will be. That’s because debt can lead to high monthly interest rates and late payments that hurt your score over time. Avoid using more than 30% of your available balance on any given card at any given time as well; this will help keep balances low and reduce the risk of defaulting on a card.
(3) Pay Down Debt
One of the best ways to improve your credit score is by paying down your debt. Not only will this reduce the amount of debt you owe, but it will also show creditors that you’re serious about repaying what you owe. Here are a few tips for paying down debt
(1) Create a realistic budget and cut expenses where possible;
(2) Make extra payments on your monthly bills;
(3) Pay off higher-interest debts first;
(4) Avoid high-interest balance transfers.
You’ll save money if you pay off your high-interest debt instead of transferring it. If you can’t pay your balances in full, talk with a bankruptcy attorney to learn more about how filing bankruptcy might help you repay your debt. It’s important to consider all options before you take drastic measures like declaring bankruptcy. A lawyer can review your financial situation and recommend the option that’s right for you.
(4) Check Your Credit Report
The first step to boosting your credit score is checking your credit report for errors. You can get a free copy of your report from each of the three major credit bureaus once per year. Look over your report carefully and dispute any errors you find. Next, pay off any debts or accounts that are in collections. If you have outstanding debt, contact the creditor or collection agency and work out a payment plan to pay it off.
Don’t close old accounts: Closing old accounts lower your average account age, which can hurt your credit score. Keep them open but don’t use them unless necessary.
Pay Bills on Time: Missing a payment on time will hurt both your credit scores and interest rates on loans.
Keep balances low: High balances are a sign of riskiness to lenders and will negatively affect your credit scores. Keep your balance below 30% of your available credit limit on all cards except one where you may keep it below 50%.
Stay Current with Minimum Payments: Finally, make sure you are always paying at least the minimum balance required by law. By following these five tips this year, you should be able to boost your credit score significantly!
(5) Maintain A Good Lending History
One of the best ways to improve your credit score is by maintaining a good lending history. That means making all your payments on time, every time. If you have any late payments, now is the time to get caught up. You should also try to keep your balances low and avoid opening new lines of credit unnecessarily. In other words, don’t max out your credit cards or open a bunch of new store accounts to build up your credit rating. It’s not going to work. The only way to increase your score over time is with consistent positive action on your part – which means no missed payments, no maxed-out credit cards, and a limited new line of credit activity. Paying off debt: A good way to boost your credit score quickly is by paying off debt. All those monthly bills that are sitting around will start decreasing your available credit limit once they’re paid off – so make sure that you’re minimizing the amount of debt you owe as much as possible.
