Are you trying to increase your credit score? A high credit score makes it easier to qualify for new loans and credit cards. You can also enjoy better interest rates and credit limits. According to Experian, a good credit score falls somewhere between 670 and 739. If it’s lower than that, it would be classified as poor. Don’t fret too much, though. Even if your credit score is poor right now, there are ways you can improve it.

In this article, we will discuss how you can boost your credit score and bring it back in good standing. Let’s start.

1.     Go Through Your Credit Report

Getting a copy of your credit report from a credit bureau is step one when you’re trying to improve your credit score. These include Experian, Equifax, and TransUnion. You can get a free copy of your credit report every 12 months, which will include details regarding::

• Your repayment history
• Your debt management
• Your credit management
• Credit inquiries made by lenders
• Accounts gone to collections
• Bankruptcy

When you go through your credit report, keep a lookout for errors. For instance, creditors may report an inaccurate late payment that can end up hurting your credit score.  Your credit report may also carry information on accounts that don’t belong to you. This can happen if your name is misspelled or your credit information got mixed up with someone with a similar name.

Cases of identity theft can also hurt your credit score. Upon finding an error, you need to file a dispute. As per the Fair Credit Reporting Act, you can write to the credit bureau that generated the report and dispute any errors. They are required to investigate them within 30 days. Once the error has been resolved, your credit score should improve.

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2.     Pay Your Bills on Time

If your credit report appears to be error-free, you can try other ways to increase your credit rating. You can start by paying your bills on time. Missed or delayed bill payments hurt your credit score. Making timely payments can help rectify this. It shows potential lenders that you are a responsible individual, capable of meeting your financial obligations.

Your payment history also makes up for 35% of your credit score. Therefore, paying bills and any past balances can make a big difference. If you have any debt, we recommend making a plan for paying it off as soon as you can.

3.     Limit Your Credit Spending

Even if you have a credit card, we recommend keeping your spending to a minimum. Your credit utilization ratio is essential to lenders. It shows how much credit you have available and how much credit card debt you have to pay off. Having low credit utilization indicates that you are doing a good job of managing your expenses and are not overspending.

Experts suggest that you should keep your credit utilization rate less than 30%. For instance, if your available credit limit is $2,000, your total outstanding balance should be less than $600.

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4.     Avoid Applying for a New Credit Card

If you are trying to repair your credit score, we suggest refraining from applying for a new credit card. If you do, the lender is likely to conduct an inquiry and review your credit score. This inquiry can show up on your credit report and hurt your rating.

The number of hard inquiries carried out and the credit accounts you opened recently also make up 10% of your credit rating. They showcase the amount of risk you pose as a borrower. For instance, if you have opened up several credit accounts in a short period, it can indicate that you are overspending or struggling to manage your expenses. Consequently, this drives your credit score further down.

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5.     Get In Touch With Your Lenders

Increasing your credit score can take time. In many cases, your financial situation also prevents you from doing what needs to be done to increase your credit score. If you are confronted with a similar situation and are falling behind on your credit payments, we recommend asking your lenders for help.

Explain your situation to them and ask about reconsidering your repayment terms. You’ll be surprised by how flexible some lenders can be. If you proactively inform them that you might miss an upcoming payment, they may be willing to go easy on you.

Many lenders also have programs designed to deal with temporary hardship. These programs reduce your interest rate or the amount you need to pay every month, allowing you to manage your payments more responsibly until your situation improves.

6.     Seek Help from a Consumer Credit Counseling Agency

If nothing else works, you can always try seeking professional help from a consumer credit counseling agency. These companies can help you establish a budget and a personalized debt management plan, which enable you to regain control of your finances. They can also consult with your creditors to get them on board with your debt management plan.

The main goal of a consumer credit counseling agency is to help you avoid bankruptcy. They help you with money management and assist you in keeping track of your credit payments.

If you go this route, make sure you opt for a reputable agency with a history of helping people in similar situations and delivering effective results.

Wrapping It Up

You’ll have to be patient and consistent with your efforts to increase your credit score. It’s not an overnight process and demands commitment. As long as you keep at it, you should see your credit score improve and change your financial situation for the better.

Good luck!

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