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Your credit may not be in great shape and you want to get good credit fast. Although, there is no quick way to fix your credit score, there are ways to build good credit and repair your credit.
It takes time to build good credit, unfortunately it only takes a few errors to damage your credit.
Despite all of that, there are legitimate ways to increase your credit score.
This post discusses;
3 basic and practical ways to improve your credit score, relatively fast.
How to get your free credit report weekly, until April 2021 due to Coronavirus. See more below.
Clean Up your Credit Report
Your credit report list all your transactions, payment history, liens, late payments, accounts in collections and bankruptcy information.
This information is compiled by the credit bureaus. The information and details are provided by banks, credit card companies and other organization that gave you credit.
Obtain your credit report. Normally, you can get a free report from all 3 bureaus at annualcreditreport once a year.
Important. Due to Coronavirus, annualcreditreport is providing free report every week. The company is extending this service until April 2021 due to the high risk of identity theft during this crisis.
The free report doesn’t include your FICO score. It gives your account history of paid and unpaid accounts.
Go over your report carefully. A credit report may contain errors. You want to clean up errors and fraudulent activities.
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If you identify any errors or transactions that you don’t recognize, contact the credit bureaus. Contact all 3 bureaus; Experian, Transunion and Equifax.
The bureaus have procedures in place for consumers to report a complaint for errors and fraudulent activities.
These bureaus are required to report back to you their findings after you’ve filed a claim.
Review your Credit Utilization
One of the metric that may help boost your credit score, your FICO, is your credit utilization.
This number makes up about 30% of your overall credit score. If you can reduce this metric, you’ll be improving your score.
Credit utilization is the amount of credit you’re using from the total credit approved.
So, if you have a credit card approved for $10,000 and you owe $5,000, you’re utilizing 50% of your credit on that card.
In that case you’re at 50% utilization rate.
However, the rate used in your score is the total of your credit used vs approved.
Credit utilization calculator
Add all your credit card debt. Add all your approved credit on credit cards.
Calculate the utilization rate = Total owed on credit card divided by total approved.
It is recommended that your utilization rate should be less than 30%. The lower it is the higher your credit score.
To improve your credit utilization you can do the following:
- Pay down debt – this will reduce the amount you owe
- Open a new card – this will increase your available credit
- Request a higher credit limit – this will increase your available credit
- Pay your credit card and leave them open
Take Out a Personal Loan
You can improve your credit score, FICO, by reducing your credit cards debt and utilization ratio.
Personal loans are installment credit, meaning you pay every month the same amount.
Credit cards are revolving credit, the amount owned, minimum payments and available credit changes every month.
You can use a personal loan, sometimes called a consolidation loan, to pay off high credit card debt. This will reduce your utilization rate and improve your score.
A personal or consolidation loan can also improve your credit score by improving your credit mix.
A mix of revolving and installment credit improves your score.
Its important to pay a personal loan on time, otherwise it will damage your credit score.
Personal loans do carry fees and interest rate. Make sure these make sense, so that you don’t end up paying more fees than it may be worth it.
Others Things to Do to Boost your FICO
Organize your money using spending trackers and a budget:
~~Download these Free Expense Trackers
Make extra money with side hustles and gigs to pay down debt:
Build your credit base on a long term strategy. This mean making your payments on time and reviewing your credit report at least once a year for errors and fraud.
Even though you can’t build good credit overnight, there are ways to boost your credit score fairly fast, as soon as a few months.
Reduce your debt, specially revolving debt. Go over your credit report. Contact the credit bureaus if you see something doesn’t belong to you. Make sure your payments are applied on time.
As extra precaution you may want to consider a credit freeze. This is a security feature offered for free to protect yo against identity theft. It ensures that only authorized persons can access your credit.
You can contact the credit bureaus to place a freeze on your credit for free. Once this is placed, you’ll have to authorize and give your security number before anyone can have access to your score.
If you’re in a difficult financial situation, consider credit counseling. These services help you learn how to manage your debt. Some credit counseling services also help you to negotiate your debts into more manageable terms.