How to Fix Credit Fast: Start With These Strategies
1. Consolidate Your Debt
To have good credit, it’s important to pay your bills on time. Don’t fall behind.
If you’re drowning in credit card debt and hemorrhaging money on interest payments, consider refinancing your debt with a personal loan from somewhere like lending club.
Once again, it’s easier than you might think.
Use that loan to pay off your high-interest credit cards. Then you repay the lender a fixed amount every month for a set time period — usually two to four years. Your interest rate on the loan should be a fraction of your APR on your credit cards. Always pay off high interest credit cards first.
2. Use Your Credit Card
Just don’t overuse it, that’s all. Buy something with your credit card every month. Even one or two purchases, like a tank of gas or a gallon of milk or, you know, Netflix. Whatever.
Get a credit card with a sign-up bonus, cash back rewards, and no annual fee. Just make sure to pay off your balance every month so you can avoid paying interest. That’s a money drain right there.
Try Debitize if you have trouble keeping up with credit card payments.
This way, you have positive activity on your credit report every month. The credit reporting agencies that calculate your credit score really like that. Basically, they won’t bite the hand that feeds them.
3. Don’t Max Out Your Cards
An important part of your credit score is “credit utilization.” That’s a fancy-pants way of saying “how much of your credit you’re actually using.”
Let’s say you have a credit card with a $2,000 limit on it, and you have a balance of $1,000 that you haven’t paid off. You’re using half your credit. Your credit utilization is 50%.
It should really be lower. The lower, the better. This makes more difference than you might think. Like . . .less than 10% utilization at all times.
4. Dispute Wrong Information
One out of every five credit reports has an error in it, according to a study by the Federal Trade Commission.
So take a look at your credit report, and dispute any incorrect information in it. Don’t worry if you’ve never done this before. It’s really not that hard. If you set aside a little time, you can do this today.
The three major credit bureaus — Equifax, Experian and TransUnion — are each required to give you a free credit report once a year. If you want, you can go to the website Annual Credit Report to get all three at once.
So what are you looking for, here? Well, if you find an “unpaid” credit card that you know you paid, or a bill in collections that you know never existed, you should file a dispute with the appropriate credit bureau.
That can be done online for free. You’ll go to Equifax’s disputes page, or Experian’s, or TransUnion’s.
See? Improving your credit doesn’t have to take seven years after all.
Taking steps to improve your credit is worth it. Especially when it comes to major life purchases — houses and cars — the higher your credit score, the better off you’ll be.
Stay Rational
-B&T