Everyone has heard about how important a good credit score is. Without good credit, you may pay hundreds — or even thousands — more money in interest charges on loans from credit cards to mortgages. In fact, you might not even get that loan in the first place if you don’t have a good credit score. So it becomes a matter of some interest to improve your credit score and do so fast.
Forget those credit repair places that will do it for you. By law, they can’t do anything for you that you can’t do yourself (for free). There are credit repair places that use “proprietary” methods to give you a boost, but these techniques can be shady at best, and often only short term. It’s not a true fix, since your credit score is likely to revert in a couple of months. If you want a permanent improvement to your credit score, you have to follow responsible credit behaviors, and reduce your debt.
Checking your credit report
The first thing you should do when attempting to improve your credit score is check your credit report from all three bureaus. You are entitled to one free report each year from each bureau. You can go to www.annualcreditreport.com to get a free report from each. If you have already used your free report for the year, you can buy your report for a fairly modest amount. The bureaus each have a 3-in-1 option for between $30 and $50 that allows you to buy all three at once (and maybe a credit score as well).
Look through each of your credit reports. Check for errors and duplicates. Sometimes your account is reported incorrectly, or it may be recorded twice. Contact the credit bureaus, and your creditors, in writing (send via registered mail so you get proof your correspondence was received) about the inaccuracies. Everything should be cleared up within 30 days. Check back to make sure the errors are taken care of. Just fixing some of the errors on your credit report can result in a higher score.
Making other improvements to your credit score
All the other improvements to your credit score need to be made through responsible credit practices. If you want to permanently improve your credit score, there are no shortcuts. One of the best things you can do is to make all of your payments on time, and in the full amount required. Payment history is a big part of your credit score. Even though your utility bills aren’t normally reported to credit bureaus, if you miss a payment, the company may decide to report. So that can negatively affect your credit score.
Paying debt down fast to improve your credit score
Another thing you can do to get a good credit score is to pay down debt. If you have the self-discipline to stop spending more than you can pay off each month on your credit cards, there is no need to cut them up. But you should try to get your debt load as low as possible. Best results are when you are using no more than 30% of the credit you have available on revolving accounts (your credit cards). How much debt you have, in relation to your available balances, is another major factor in your score. You want to keep your debt low.
Finally, consider the type of debt that you have. Get rid of the debt that is considered most detrimental first. Payday loans, car title loans and department store credit cards are considered somewhat second-rate when it comes to debt. Your score will be more negatively affected to some degree when you have these types of debt as opposed to debt from traditional banks and major credit cards.
In the end, it’s up to you to change your habits and build a good credit history. If you work at this, you should see some improvement in 60 to 90 days, and even more drastic changes after 120 days. There’s no question that the faster you work towards improving your credit score, the faster you’ll see results.
This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.