Most Americans out there today that aren’t currently already in debt bring home enough money each month to cover all of their monthly expenses. Because if this, it’s certainly possible for them to live without touching credit for months if not years at a time. However, it’s virtually impossible to live an entire lifetime without needing credit at some point.
Ever plan on renting a new place, buying a new place, or buying a new car? Hell, even getting a new job? All of those are times when you will possibly need credit. If you have been misusing your credit or not using credit at all, then you will have no credit history or a poor credit history when it comes time to do a credit check. The good news is that building a good credit score is not the hardest thing in the world to do. We can provide you with some quick tips to raise your credit score with ease. The first step is to request a copy of your credit reports.
You might be wondering why we said “reports” and not “report”. This is because there are three major credit bureaus that score you on your credit use. They are Experian, Equifax, and TransUnion. Each of these credit bureaus are required by law to provide you with 1 free copy of your credit report every year. You can easily request these on your own from AnnualCreditReport.com. Upon receiving your credit reports you’re going to want to read through and attempt to identify any errors that you can find in them. It’s actually unfortunately common for there to be erroneous mistakes on credit reports. Should you find any mistakes on these reports you’re going to want to file a letter of dispute. Removing negative items from your credit reports is one of many ways to increase your credit score. Here are some more ways…
After a certain measure of time goes by, lenders understand that they are likely never going to get a full amount of debt paid back to them. This puts you at an advantage because you can then reach out and try to come to an agreement with them. You can offer to pay a lower total amount or you can sometimes negotiate a lower payment for longer. This can help prevent you from having your account sent to collections, which would negatively impact your credit score.
If you have had a pretty good but not perfect payment history, this might be a good tactic for you. If you have been 90%+ on time with your payment history you can actually reach out to a lender and ask them to remove the negative items (missed payments) from your credit report. This is especially successful for those consumers who can prove that they have been under extra financial hardship. GoBankingRates has a post with 6 tips for writing a goodwill letter. Definitely something worth checking out.
While this might not be the “quickest” tip, it’s an absolute necessity for boosting your credit score. Having no credit history is almost as bad as having a bad credit history. Lenders know nothing about your spending habits and or how reliable you are at paying back borrowed money. So if you have no credit history chances are your credit score will reflect that and be very low.
The best thing you can do for yourself is to start making purchases you can afford on credit, and then paying them off in full each month. This will help you establish a history of financial trustworthiness and raise your credit score over time. Doing this will help you when it comes time to qualify for an auto loan or a mortgage. Instead of getting denied or hit with a high interest rate you will instead be offered something reasonable.
If you already have a bad credit history, then you might want to look into secured credit cards. These cards require you to put a deposit on them. After placing your deposit you treat the card like a credit card. However, if you miss payments then the balance will be taken out of your deposit. You’re going to want to make sure you don’t miss any payments though.
If you can get a parent, spouse, sibling, etc to add you on to their credit cards as an authorized user you can actually build credit by using their credit cards. Of course, if you don’t pay off the purchases that spouse/parent/sibling is going to be responsible for your purchases. So you’re going to want to make sure you’re extra responsible and not screwing over your family. Sometimes an authorized user is the only way you can start to build a credit history.
Having more credit available to you will help raise your credit score, so long as you are not using all of the credit offered to you. Having a low “amount owed” to “credit available” ratio is a great way to show that you are not desperate for money and that you pay off your balances responsibly. Speaking of which…
This ratio is a huge factor in calculating your credit score. If you have a credit line of $10,000 but you owe $9,500 then it looks like you are struggling to stay afloat and nearing using all of the credit available to you. This is a red flag to lenders. However, you could owe $9,500 on a $30,000 credit line and appear to be doing fine. You never want to be using most of your credit line at any given time if you don’t have to.
Hopefully this article gave you some basic ideas of ways that you can beef up your credit score fast. Keep in mind that there are many other ways out there to build your credit. Also remember that building credit is a continual process and something you need to continue to work towards if you care about your personal finance.