If you have bad credit and have had a tough time figuring out how to raise your credit score...
We feel you.
Fixing your credit score may seem like a nearly impossible task, but it can be done. It’ll take time and effort, but adding 50-100 points onto your score can probably happen sooner than you think.
Here’s how you can do it.
1. Keep Tabs on Your Current Credit Score
Monitoring your current credit score when you have bad credit is usually the last thing you want to do, but keeping track of your progress is a pretty important part of improving your credit.
Luckily, there are great services available for free that will give you a good idea of where you stand (and probably throw in a few tips on how to improve as well). I recommend Credit Sesame or Credit Karma to get started.
Signing up is easy (and FREE!) and they will monitor your account and send alerts whenever something changes. I’ve signed up for both in the past just to see how similar they are, and both are great services that get a gold star from me.
2. Get Your Credit Report (It’s Free!)
I promise I’m not lying about all this free stuff, because in this case, free really does mean free!
You’re entitled to get three free credit reports every year and should definitely take advantage of it. Even more, put some strategy into it! Since you’re able to get three each year, sign up for one every four months and you’ll instantly be able to monitor your credit report year-round.
I recommend heading to annualcreditreport.com now to get your first copy.
Once you have it, you’ll be able to look through the report and check for any errors or marks against your credit that you didn’t know you had previously. Also, if you have any past-due accounts still lingering on your report, negotiate to settle them so they stop affecting your score.
3. Pay On Time
The best way to improve your credit score is to focus your energy on fixing the current issues with your credit. It will take some time to see progress, but is well worth it. Why?
Your credit history accounts for 35% of your credit score. That’s huge. So, if you’ve had some trouble sticking to regular payments, this is your chance to fix that.
The first step is to pay off any past-due bills you may have, then stay current with your monthly bills. If it seems impossible, take a step back and truly ask yourself if there are any expenses you can cut out of your life even if it’s just temporary (cable, for example). If you continue to stay on top of your bills and make payments on-time, your credit will gradually improve.
4. Get a Secured Credit Card
I could go on and on about secured credit cards, but the main takeaway is if you want to build credit, you have to use credit.
Some may disagree, but utilizing credit makes up another 30% of your credit score, so it’s definitely an important component.
Credit utilization is comparing how much credit you’re using with how much credit is available to you. The best scores tend to have a large amount of credit available to them, but don’t use that much. For example, if you have a $10,000 credit line and regularly only utilize $2,000.
By using a secured credit card every now and then, you’ll be able to prove you are reliable and responsible to creditors. When they revisit your account and take note of your progress, your credit line will increase, as will your credit score.
5. Twiddle Your Thumbs and Wait
Once you’ve gone through the other steps, all you can do now is have patience and wait for your credit score to increase.
While that may not have been what you were hoping for, the truth is, your credit problems most likely didn’t happen overnight and they can’t be expected to magically change overnight either.
In the meantime, keep up with your bills by making on-time payments and use your secured credit card in small increments. It will pay-off in the end!
Have you had success with improving your credit score? Let us know!