We all know that there are very few things that can improve your credit score overnight. Short of getting an unexpected windfall that pays off all of your debt or realizing that there are erroneous black marks on your credit score that can be cleared up immediately, you’re going to have to create a plan and stick with it for a minimum of six months if you want to see major improvements to your credit rating. But the process doesn’t necessarily have to be difficult, and there are resources to help you out along the way. Here are a few simple steps that can help to improve anyone’s credit score.
- Check your credit report. In and of itself, this will not improve your credit. But if you don’t know what your credit score is or what’s holding you back, it’s going to be pretty hard to start making improvements. So order your credit report from an organization that provides them for free and get a gander at what you’re working with. You’ll be able to see black marks on your credit so that you can start to address them, improving your score along the way.
- Switch to automatic payments. As busy adults in these fast-paced, modern times it’s all too easy for things to get lost in the shuffle. But missing payments is going to get you in hot water, especially if you do it frequently. Not only could you end up paying unnecessary fees, but there’s a good chance companies will start reporting you to credit bureaus. And if you go to collections on bills, you could suffer some serious damage to your credit score. Luckily, many companies are now set up for automatic billing, so that you can arrange to have money released directly from your bank account every month. This should help to eliminate both late fees and the credit snafus resulting from late or missed payments.
- Keep good debt, eliminate bad. Most people naturally want to pay down a home loan as soon as possible, but don’t be too hasty. If it’s a matter of paying more toward the principle on your mortgage each month or more toward your credit card debt, you’ll want to select the latter. There are a couple of reasons for this. First, you get a tax write-off each year for your mortgage interest payments. In addition, however, long-terms loans that you’re paying religiously (like a mortgage) actually help to boost your credit score, while short-term, credit card loans can have a negative impact. Ideally, you want to carry no more than about 30% of your credit limit, so pay down those credit cards before other types of debt.
- If you’re dealing with a lot of debt, one good option to boost your score is to consolidate by moving balances to the credit card with the lowest interest rate, taking out a personal loan at a lower interest rate to pay off cards, or rolling debt over when you refinance a mortgage. There are potential benefits and drawbacks to each scenario, so you’ll have to crunch numbers to see which is the best solution for your particular situation. But lowering your interest rate and payments could help you to pay off debt faster.
- Hire a credit repair specialist. Getting your free credit report from Credit Sesame is a good place to start, but you still might not have a solid plan for improving your score. If you have poor credit, there’s a good chance poor decisions brought you to that pass. But you can hire a credit repair specialist to help you get a financial plan in order so that you can pay down debt and bump up your credit score in an expedient manner.