Your credit score indicates the difference between being approved or denied for a credit card or a loan on a high or low rate of interest. A good credit score plays an important role in securing a mortgage or property for you, getting your loan for the car or any other asset or to get a job.
The credit scoring model considers certain factors more closely, such as a debt owed and payment history. If you are struggling with debt and trying to manage your finances right, the following ways can help you improve your credit score quickly.
Analyze the Errors on Your Credit Report
You must get a copy of your credit report every year with a request which does not affect your score. Once you get the report, check it for errors as errors on the report are common which may seriously lower the score on your credit.
You must particularly check and ensure that no late payments are incorrectly reflecting on any of your accounts. Also, the owed amounts on any of your open accounts are accurate. If you detect any error in the report, you must dispute it with credit bureaus. They will then, work with you on the disputes and rectify the errors if any.
File for Bankruptcy
If you are under pressure to pay your outstanding loans or utility and credit card bills, you may consider filing for bankruptcy. While bankruptcy gives an option to start afresh financially, not everyone qualifies for it.
Understanding bankruptcy clearly is also important, as this will get recorded on your credit history. If you are stuck and willing to improve your credit score, seek advice from an experienced bankruptcy attorney and make life easier.
What Affects Credit Score?
Missed payments, regular late payments, and huge debt balances contribute heavily towards plummeting your credit score. Usually, a lot of consumers who carry huge balances already have low credit scores. If they are still unable to pay the debt, for whatever reason, the chances to improve credit score becomes all the more difficult.
Payment Reminders
Timely credit payments can help you largely in improving your credit scores. You may ask your bank to send you payment reminders through text message or an email whenever the payment is due. It is also advisable that you enroll yourself in automatic payments via your credit card.
This will also facilitate your loan payments being automatically debited from the bank account. However, you must ensure that your bank has sufficient money for such automatic payments.
Diminish your Debt Amount
This may sound little unachievable, however, diminishing the outstanding debt amount can greatly help in improving your credit score. You must immediately stop using your credit cards too often. Make a list of all your accounts using your credit report and check your recent statements to know how much you need to pay on each account.
Make a payment plan allowing a major part of your existing budget for payments towards all primary interest cards, and maintain an assured payment on other accounts.
Do You Know The 30 Percent Rule?
The 30% rule stated by the credit companies expects you to stay under 30% of the credit limit assigned. If you go beyond 30%, your credit score may diminish. This would happen even if you make payments every month. If it is not feasible for you to stay under 30%, you must consider making a series of payments during the month for lowering the amount you’ve spent.
Increasing Credit Limit
If paying down your balances seems difficult, you may consider increasing your credit limit. This will improve your credit utilization rate, provided you don’t start spending immediately. This is a better option than applying for new credit cards. You must also be mindful not to close any credit card accounts, despite their non-usability as these can help recover your credit score without costing you anything.
It’s important to know that mending bad credit takes time and there is no shortcut to repair a credit score. In fact, quick-fix attempts may do more harm than good. Thus, beware of any suggestion that claims to recover your credit score instantly. There is no alternative to managing your credit responsibly over time. If you are still confused, and looking to improve your credit scores, you should talk to a Philadelphia bankruptcy attorney at 215-515-5955.
This article first appeared on my blog.
