Your credit score is important because it determines your eligibility for a credit card and the interest you will pay on loans. In fact, a bad credit score affects more aspects of one’s life that most people realize. With the global pandemic affecting economies, ensuring your credit score remains good is critical.
Here are seven ways to improve your credit score fast.
- Check your credit reports
Before taking any steps, get a copy of your credit report from the three leading reporting companies, TransUnion, Equifax, and Experian. Check the entire report minutely, especially if any account reflects unpaid bills or delayed payments. If you find any errors, report these immediately and get these rectified.
- Reduce your balance
Almost 30% of your FICO® score depends on the outstanding debt balance. The credit utilization rate, which is the outstanding debt when compared to total available credit, is important. In case this ratio is high, it is recommended you reduce the balance to boost your credit score. Keeping the ratio below 30% is helpful.
- Make frequent payments
An excellent way to keep the credit card balance low is to make multiple micropayments during the month. This reflects in the credit utilization rate by keeping it lower rather than letting it increase as the payment due date nears. Credit card companies report the balance once in a month, and a higher balance may appear as overusing the credit limit, which impacts your score.
- Enhance the credit limit
If you are unable to reduce the balance, there is another way of lowering the credit utilization ratio. Call your card company and ask for an enhancement in the credit limit. However, it is crucial you do not use the increased limit because it defeats the purpose of lowering the credit utilization rate.
- Keep your cards open
When you close a credit card, you lose the limit available on it. This means it impacts the credit utilization rate, which in turn may lower your score. As a way to improve your credit score fast, it is recommended you keep the cards open and occasionally use these to ensure the issuer does not close the cards.
- Make timely payments
If you do not make timely payments on your bills, no strategy to boost your credit score will be effective. Payment history is one of the most important criteria that affect your score. If you miss the date by more than 30 days, immediately call the creditor and make the arrangement to pay so the issuer will not report the delayed payment. Moreover, you cannot do anything about a past error, but staying on top of current payments will help improve your score.
- Become an authorized user
Consider becoming an authorized user on someone else’s credit card. Choose a friend or relative with a higher credit limit and a long credit history to add you as an authorized user on their card. When the primary user makes timely payments, it reflects on your card and immediately boosts your score.
These seven ways to improve your credit score fast should stand you in good stead, provided you follow them properly.