Improving your credit score and getting back on track with credit restoration can seem like an impossible task, but it doesn’t have to be. If you’re trying to improve your credit score from bad to good or from good to excellent, this easy guide will show you how to do it in five simple steps. By being smart about what you buy and when you buy it, paying off any lingering debts, and keeping an eye on your credit report at all times, you can get back on track in no time!
Step 1: Get Educated
Knowing how credit scores work is the first step toward improving your credit score. Compile a list of all the steps necessary for a healthy credit score: good payment history, high balances, low balances, and the average age of the account. Spend some time reading about what these measures mean and then take the next four steps to improve your score.
1) Installment payments are better than lump sum payments because they show that you have the ability to pay off debts over time.
2) A few late payments are OK, but more than three missed or late payments will harm your credit score.
3) To avoid unnecessary expenses it’s best not to carry a balance on a card. The longer you can go without incurring interest charges the better off you’ll be!
5) Paying down your balance every month is beneficial, especially if you do so before the due date. Paying down small amounts each month also helps to extend your credit length, which gives lenders reason to believe that you’ll make future payments in full.
6) Finally, always use your cards responsibly by only charging what you can afford to pay back at the end of each billing cycle (or whenever possible).
Step 2: Understand TheAnatomy Of A Credit Report
A credit report is a snapshot of your financial status. It tells creditors what you owe, how well you’ve paid those debts, whether you’ve opened any new accounts, and much more. A good credit score can help people secure an apartment or a loan for their education.
A bad credit score can close doors and raise costs. To improve your credit score and strengthen your finances, consider these steps – Understand the anatomy of a credit report by reviewing each account listed on your report as well as the dates and amounts associated with them.
Check for errors that may have occurred on your account such as reporting inaccurate balances or payments due dates that were different from what was actually reported to the bureaus. You may also want to contact the creditor if you are having trouble understanding why they are reporting certain information about your account.
Step 3: Track Your Progress
Watching your credit score go up is gratifying, but you have to stay the course. No matter how fast it jumps from one day to the next, it will go back down if you let the balances creep back up or stop paying attention for even a little while. Put reminders on your calendar if you need them or just sign up for text alerts so that you know when your reports are due for review. These notifications can remind you of all of the work you’ve done, and keep you on track as well.
Step 4: Set Goals
The best way to set goals is to write them down. Start by describing what you want. For example, I want an average credit score by the end of the year. Then break this goal into milestones for how it might be accomplished. For example, to have an average credit score by the end of the year, I need to increase my score by 150 points.
The next step is working on your plan. What will you do? How much time will you spend working on your goal? What are your tasks and when will they be completed? It’s important that you only work on one goal at a time (rather than trying five different projects) so it’s easy to see progress with any one project and understand how things are going overall. When making plans, always make sure to think about who can help you achieve your goal. What resources do you need? Who will support you in your efforts?
Step 5: Check Your TransunionFICO® Score
To review your TransUnion FICO® credit score, you will need your free online Equifax® credit report. You can get this through the Equifax website by creating an account and using their service. Make sure you know your user ID and password because these items are needed when logging in for the first time. When viewing your Equifax® credit report, scroll down until you see the Check my FICO Score link on the left side of the page. Enter a valid Social Security number and click continue. After that, enter a valid date of birth and date of address, such as today’s date or close to it, for best results.