You may come to a time where your credit score becomes more important to you than it ever was before. It can seem, sometimes, like an abstract number. You may not even be aware what your credit score is until need a loan for a major purchase. These purchases tend to be important, pivotal investments and it’s no time to get bad news about your credit score.
If you get declined for an important loan, it will likely be due to a low credit score. Once you realize your credit score is holding you back, how do you fix it? It’s important to know how long it takes to rebuild your credit. Then, how to figure out a timeline that will best serve you in the near future. Here are some actions you can follow today that will ultimately improve your credit in a short amount of time. These are the best ways to improve your credit score quickly.
Automatic payments are the best. Your payment history makes up a substantial chunk of your credit score. If you are late on a payment, it reflects poorly on your score. When you set up automatic payments, you never have to worry about those payments being made on time. This goes for any payments you are responsible for on a monthly basis. It’s not just for credit cards. If you have too many accounts, or don’t have enough in the bank, then there is a larger budgeting issue that needs to be addressed in order to get back on track.
Use a Credit Card
Going back to payment history, if you use a card and pay it off regularly, it will help you build good credit. This is different from automatic payments which go out for subscription services, utilities, or loan payments. Credit card bills should be paid in full to keep outstanding debt down. The closer your balance gets to your credit limit, the more negatively your score will be affected. It’s best not to rely on credit cards for this reason. It’s common to use a card for something simple like gas and groceries and just always pay off the balance.
Secured Credit Card
In case you have difficulty getting a credit card, you can choose to get a secured credit card, which just means that you pay the credit limit in advance. You still have to make the credit card payments, which is the point, but the money you put down will always be there. Check with your banker before doing this to make sure there is a way to get your money back at some point without closing the account. Usually you will qualify for a different card and receive your down payment upon upgrade.
Pay Down Active Credit Card Debt
Active credit card debt is working against you, but the more you can cut that debt down, the better it is for improving your score. Target outstanding credit card debt before addressing any old debts. The credit card focus is what is going to really have an impact on your score. Another thing to be aware of is your payment history specific to the type of loan you want to get. Car Loan officers are going to look at car payment history. Repos, late payments, etc will all have some bearing on your ability to get a car loan. While this is separate from your credit score you should get advice from a loan officer specific to the line of credit you seek.
Another good way to establish a stronger foothold on your way to better credit is to become an authorized user of another person’s credit card account. You do need to do your research to make sure joining with a parent or relative’s account will not bring your score down. If they are in good standing, it can help push your score in the right direction.
Whatever type of loan you are trying to qualify for with your credit score, you will most likely need a down payment handy. The larger the down payment, the better the loan deal. Your eligibility is affected in other ways as well. While you work on increasing your credit score, be sure that down payment money is not touched and that it is allowed to become “seasoned” by remaining in your account for 3 to 6 months. This presents stability, which in turn impacts your ability to receive a loan offer.
Do Not Dispute
It’s within your right to dispute inaccuracies with the credit burrow, but it can also halt your ability to get a loan. While the item in question is in dispute and under investigation, your FICO Score will go up. However, this is just temporary and once the case is closed the chips will fall where they may. in the meantime, lenders will often disregard potential customers that have any items in dispute on their credit report for this very reason.