As recovery from the Great Recession continues to progress, we have seen a number of positive developments. Unemployment continues to decline, the markets are trending upward, and overall credit scores are on the rise. More people are working, which means debts are getting paid more regularly. However, there are still many people out there who have bad credit scores. A bad credit score is a rating below 600, and according to FICO, about 20 percent of consumers fall into this category.
A negative side effect from the positive developments in the current economy is that, with more people working and making money, more people are in the market for home loans, cars, and other major purchases. That means there is more competition to secure loans from lenders. This can drive up prices. It can also mean that the person with the better credit score will be more likely to get the house when there is competition.
If your credit score is lower than you would like, the trick now is raising your credit score fast so you can get in on the action. When we think of credit scores, we often think of a lifetime of financial reputation. So how can you raise your credit score fast?
While good lifelong financial behavior is what we all ought to strive for, there are things you can do right now to raise your credit score fast. These tips will help you take advantage of better interest rates and get access to the credit you need to make those major purchases.
Review Your Credit Report
The first thing you can do to raise your credit score fast is to make sure it is accurate. By law, each person can access one credit report per year free of charge. You can request a copy of each of the three big scores (Equifax, Experian, TransUnion) at AnnualCreditReport.com.
When you get your reports, make sure you print them and save them so you can go back to them without having to request another report. You can raise your credit score fast by finding any inaccuracies and straightening them out. You don’t want to be punished for things you didn’t do. This is one way to raise your credit score fast.
Understand Your Credit
In addition to getting your credit report and checking for any inaccuracies or areas where you need to improve, a major early step to raise your credit score fast is to understand what it all means. Knowing what factors into your credit score, what kind of score you want to have, and how you can raise it will help guide you as you go.
Pay Down Your Credit Cards
This is the one we hear about all the time, and that is because it is crucial to your credit score. Credit utilization is a term that refers to how much of your available credit you are using. When thinking about how to raise your credit score fast, this is where you need to look. If you have a $10,000 credit limit and carry a balance of $5,000 you are using 50 percent of your available credit, or a credit utilization of 50 percent. Financial advisors tend to recommend keeping this below 30 percent.
Review Your Budget and Make Cuts
If you really want to raise your credit score fast, part of doing so means tightening your budget so you can put more of your income toward reducing your debt, particularly credit card debt. By trimming as much as you can when it comes to optional spending like going out to eat or traveling, you can put that money toward reducing your credit utilization. Also, since we are talking about raising your credit score fast, you can think of these budget cuts as temporary. But as an additional bonus, reviewing your budget now will help you determine how much you can afford when it comes to deciding on the size of your future loan payments. Plus, you will ultimately have more money available after you have paid off those credit card balances.
Always Pay on Time
This one is simple but crucial. Late payments hurt your credit score. Your payment history accounts for 35% of your credit score, so it is important to have, or start to have, a solid payment history. To make sure you pay on time, set up automatic payments or payment reminders. If a payment is due sometime between paychecks, go ahead and pay it right after you get paid to make sure you are not late. This is a great way to raise your credit score fast and to make sure it stays higher.
Increase Your Credit Limit
If you qualify for a higher credit limit, this is a very quick way to raise your credit score fast. You can immediately decrease your credit utilization simply by having more credit available. Just be cautious. Do not get tempted to use that additional credit unnecessarily and get hampered with more debt.
Pay Twice Per Month
In addition to paying more, you can pay smart. By making payments toward your debt twice per month, you can pay off the principal faster, and you can raise your credit score fast. Credit card companies will report on your credit as a snapshot at one time in the month. If you happen to have not yet paid your balance that month, it will look like you have more debt. By paying twice per month, even if the total amount paid that month remains the same, you keep the balance lower throughout the month.
Become an Authorized User
This is another almost immediate way to raise your credit score fast. You just have to have someone with great credit who loves and trusts you. A parent or other family member usually fits the bill here. If you become an authorized user on their credit card or account, you benefit from the low credit utilization of that account. Just tell your helper that you need to get on their account to raise your credit score fast and that you will not use the card. As long as you keep your end of the bargain, the arrangement will not cause them any issues, and it will help you out immensely.
Open a New Credit Account
This is another quick way to raise your credit score fast. By opening a new credit account, you have a clean slate on that account without any credit issues. You increase your available credit and reduce your credit utilization percentage. Just like raising your credit limit, though, be careful not to overuse your new account to take on more debt. Also, just open one new account to raise your credit score fast. If you open multiple new accounts quickly, it will look like you are going to be spending a lot and taking on more debt, which will hurt your cause.
Negotiate Debts and Payments
If making budget cuts and putting more money toward your current debts isn’t cutting it as a way to raise your credit score fast, you can turn toward your creditors and try to negotiate new terms. You might be able to consolidate your debt or get a new account that will absorb your old debt at a lower rate. There are options out there to help you reduce rates and get better terms so you can pay it off more quickly. Renegotiating the terms of your debt is far better for your credit than risking any form of default. A credit or financial advisor can help you with options for finding better terms for your debt.
Get Financial Counselling
This might not be the quickest way to raise your credit score fast, but by talking to a financial counselor, you can learn more about how to raise your credit score in ways that are specific to your unique financial situation. Sometimes having a good coach or advisor helps us get more honest and disciplined about our finances.
If you are looking to make major purchases for things like a house or car, you will need to have a strong credit score. Now is the time to raise your credit score so you can get in on great opportunities and get the best terms you can when financing. To raise your credit score fast, start with a plan and start putting these steps into action. Once you get working on it, you will start to see the results you want. Raising your credit score is a matter of taking care of as many of the details as you can while keeping your focus on the big picture. For example, if cutting your budget starts to feel cumbersome, just think of the possibilities that will open up to you once you have reached your credit score goal.
To make the most of your credit and for more help on how to raise your credit score fast, turn to the experts at Lift Credit. You want a good financial expert on your side to help you make the most of your finances. Call Lift Credit today!