If you have looked at your credit score lately and shook your head at its poor sight, you are not alone. Thousands of Americans suffer from poor credit, and a lot of the poor credit is not due to any fault of the consumer. Our economy took a large hit and it has taken a long time not only for the economy to bounce back, but also for individual consumers to bounce back too. If you are among those that were hit hard with job loss and difficulty finding a new job, you might find that your credit score is lower than you would like it to be or that your lender would like it to be, for that matter! Rather than giving up and becoming a renter for life, consider the following tips to help you raise your credit in a short amount of time.
No Magical Timeframe
Unfortunately, there is no magical timeframe as to when your credit score should rise. It takes time as credit bureaus only change things once a month. If nothing changed in your credit history during that month, your credit might not even change. It is all about the cumulative changes that you make that will add up over time, giving you the results you desire. Unfortunately, you cannot rectify one late payment and assume that your credit score will be better tomorrow; it takes time to get it back to where you would like it, but always taking positive strides towards it will work to your benefit. Typically, the average timeframe for any changes to occur takes between 30 and 60 days, give or take a few months.
The Quickest Changes
So what are some quick changes you can make to get your credit score to improve? Here are a few tried and true tactics:
- Go over your credit report with a fine-toothed comb. Every bureau provides consumers with one free credit report per year. Since there are three bureaus, it is a good idea to check your credit score with one bureau every four months. Since errors are rather common on credit reports, you can quickly get your errors fixed, helping your credit score to increase. Sometimes just contacting the credit bureau themselves with the proof that there is an error is enough, but other times, you will have to contact the person that reported it incorrectly and get them to correct it.
- Decrease the amount of credit you use. Just by not charging something, you lower your utilization rate, which equals a higher credit score in most cases. If you have a low credit score, the best thing to do is to stop charging new items as that only increases the utilization rate, making your score decrease even more.
- Pay off credit that you can afford to pay off. If you have the ability to pay off some of your outstanding credit, your utilization rate will automatically decrease, which means that your credit score will increase with the next change in 30 to 60 days.
- Increase the amount of available credit you have in your name. This is done by applying for new credit cards, but this can go either way. If you apply for a new card or two and leave it alone – meaning you do not charge anything on them, you automatically decrease your utilization rate. If you cannot help but charge on those new cards, however, you are doing yourself a disservice because you are increasing your utilization rate and decreasing your credit score.
Talking to Creditors
The worst thing you could ever do to your credit score is to not negotiate with creditors. Even if your payments are late, you should not ignore them, thinking they will just go away or that the creditor will not realize it. The longer the late payments sit unpaid, the worse your credit becomes. Instead, talk to the creditors – let them know what you are dealing with and why your payments are late. You might be surprised to see how many creditors will work with you. They might have a payment arrangement that will help bring your account current and help you get your balance paid off rather than simply reporting your payments as late. When you have late payments that keep rolling into one another, the days start to add up; what once started as a 30-day late payment suddenly becomes a 90 or 120-day late payment, which can really hurt your credit score. Never, ignore your late payments – see what the creditors have to offer.
Create Good Habits
The best way to keep your credit score up or even to increase it from a low score is to create good financial habits. If you charge something, make sure it is something you can afford to pay off. If you are trying to keep your credit score up by having a credit history, it is okay to keep a small balance, but continually make payments and keep an eye on what new items you charge to ensure that your utilization rate does not get too high. You need to find the perfect balance between enough credit history and low enough used credit to keep your credit score at the optimal rate that lenders want to see it at in order to look at you as a good credit risk.
If you cannot change your credit score in 30 to 60 days, do not assume that all is lost – remember this is a cumulative process that will get better over time. The better financial habits you keep over time, the better off you will be in the end. If your credit score does not magically change in one month, keep going with your good habits and making sure your credit lines stay intact. Eventually, the score will increase and you will be rewarded with mortgage approvals and low interest rates to help you afford the mortgage in the future.