While the average credit score in the U.S. is 710, that doesn’t mean everyone has good credit. If you happen to have a poor or damaged credit score (typically below 670), it can hold you back from getting a new car, renting an apartment or buying your home. Here are seven steps you can take to fix your credit fast:
- Check Your Credit Score & Report
Your credit report contains information about how you’ve used credit in the past 10 years. You have one free annual credit report at each of the three bureaus: Equifax, Experian and TransUnion. Your credit report is used to calculate your credit score, and it’s important to check this too. You can check your credit score for free through credit scoring websites or some credit card providers. We recommend checking your score once per month.
- Fix or Dispute Any Errors
Sometimes credit bureaus make errors. According to one study by the Federal Trade Commission, a quarter of people had errors on their credit report and 5% of people had errors that could have made getting a loan more costly for them. While knowing your credit report and credit score is a good first step, fix your credit fast it’s also crucial to look for errors. If you find any, it’s a relatively simple process to dispute those errors and to have them removed.
- Pay Your Bills On Time
Your payment history makes up 35% of your credit score. If you want to fix your credit fast, you should focus on ironing out your monthly payments.
- Keep Your Credit Utilization Ratio Below 30%
Credit Utilization Ratio is measured by comparing your credit card balances to your overall credit card limit. Lenders use this ratio to evaluate how well you manage your finances. A ratio of less than 30% and greater than 0% is generally considered good.
- Pay Down Other Debts
If you have outstanding debts, paying them off can help improve your payment history and reduce your credit utilization ratio this will be near the #1 way fix your credit fast. When planning to repay your credit card debt, you can evaluate paying your high interest credit cards first or pay your small balances first. If you plan to repay loan debt, it’s important to note that you might see a temporary dip in your credit score. But rest assured, this will improve your credit score in the long term, according to Experian.
- Keep Old Credit Cards Open
You might be tempted to close old credit cards when you’ve paid them off--don’t be so quick to do so. By keeping them open, you can establish a long credit history, which makes up 15% of your credit score.
- Don’t Take Out Credit Unless You Need It
Each time you apply for credit, your creditor will run a hard credit check. This can drop your score by one to five points. It’ll also lower your average account age, which also can drop your credit score. Try to avoid applying for more credit unless you really need it.
How Long Does It Take to Fix Your Credit?
While you may take some actions to fix your credit fast, like paying down your credit card balance, it could take longer than you expect to see the results. Sometimes it can take at least a few weeks for creditors to report your payment information and companies to update your score because of it. In general, fixing your credit score is a long-term game.
Next Steps: Check Your Credit Score Regularly.
Once you start taking the steps to fix your credit, it’s a good idea to keep regular tabs on your score by checking it once a month. This will allow you to catch any errors and see how your actions are playing a role in improving your score.
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