Having good credit is a necessity for several reasons including buying a house or car, applying for a credit card, renting an apartment, buying a phone, and more. Without good credit, you could be left without these important essentials of life. Unfortunately, there aren’t many options other than buckling down and learning how to repair your credit.
Those with better credit scores have better interest rates on their loans whether it be for a car, house, or something else. With that in mind, here are 7 tips on repairing your credit score that everyone should know about:
1. Pay Off All Debt
The first step to repairing your credit is to begin paying off all debt. Whatever debt you have that is taking points off your credit score, eliminate it. A good way to do this is to visit a credit monitoring site and begin taking a look at and monitoring your credit. List all of the debt that’s bringing your credit score down, and then set up a plausible payment plan for yourself and make payments each month. Once you start paying off this debt, you’ll see your credit score skyrocket.
2. Pay Off High-Interest Cards First
You should also keep in mind that paying off high-interest credit cards first is essential. The credit cards that you have in your name with the highest interest rates are the ones that affect your credit the most because they’re charging you such a large percentage of the loan each month. In some cases, it might seem like it’s impossible to pay the balance off. With high-interest cards, it’s better to put a large amount towards them. Once you get this done, your credit score will improve.
3. Keep Credit Card Balances Low
Whether it’s your high-interest credit cards or your low-interest ones from your bank or credit union, you need to keep the balances on all of them low. For a credit card balance not to affect your credit score in a negative way, you need to keep it at 40%. For example, if you have a $1500 credit card, then you need to keep at least $600 on the card or more.
4. Dispute Any Inaccuracies on Credit Report
Look for any credit report inaccuracies. Is there something that you’re not familiar with that’s bringing your score down? For example, maybe there’s a car loan showing past-due payments, but you’ve never taken a loan out on that type of car before. Maybe there’s a maxed-out credit card in your name for a store that you’ve never been too. If you do find something on your report that seems a bit skeptical, then dispute it immediately.
5. Be Added as an Authorized User
Ask someone close to you to add you as an authorized user on their account. As long as this person has good credit and has plans to continue having good credit, then this is a good way to bring your score up. Consider asking your spouse or close relative to add you as an authorized user on their credit card or other accounts that are fully paid off. Do keep in mind, however, that if they’re late on a payment it will affect you negatively as well.
6. Be Cautious When Applying for New Credit
Applying for new credit is a great way to help your credit score rise. There are even loans and credit cards for people with bad credit, which is a wonderful option for someone who needs money but has no other option because of their bad credit. These cards can also help increase your credit score if handled responsibly and don’t require a credit check.
On the other hand, be cautious when applying for new credit as a credit check will be done on other types of credit. When this happens, your credit score will take a hit. You also don’t want to take out more credit if you’re not financially responsible.
7. Pay Bills on Time
If you can pay all of your bills on time each month, then your credit score is going to reap the benefits. One simple late payment could do damage to your credit score. Pay the most important bills first and, if necessary, take the time to contact those who you’ll be paying late. In many cases, these companies allow for payment plans and will sometimes give an extension as well.
It’s Time to Start Repairing Your Credit Score Today!
Repairing your credit score is a breeze if you know what to do. Always do your research, pay off all debt, keep credit balances low, and start paying your bills on time. By following these steps, you’ll see a credit score transformation in no time!
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