If your credit score is less than delightful there are some tried and true ways to repair it. Some of the tactics listed below often kick in overnight, while others will require some patience on your part for at least six months to a year.
If you currently are in default or in collections with your accounts, trying to fix your credit is almost impossible until you clear those bad debts. However, for the rest of America struggling with low credit scores, here’s your fix. Combine the following ways to fix credit. Not all will work for you, but enough of them will move your score into the good zone quickly.
The best way to fix credit score issues is to pay your bills on time. But what if you already have some late payments there? If you have a great history of paying on time and this is the only time you have been late, call your credit card company and ask if they will remove that from your score.
One of the reasons you may have poor credit is because you have NO credit history. This is especially true if you have never had a credit card or are very young and just starting out on your own. You would be amazed at how fast your credit score cranks upward when you open just ONE store card for a small limit of just $300.
Some of the easiest to apply for include Kohls, TJ Maxx, Home Depot, Lowe’s, and IKEA. Some who have used this tactic have seen their scores gain at least 50 points…. just by adding one card.
Lenders love to see that you are responsible for your credit in a wide variety of circumstances. For example, just having a couple of store cards is not going to tell an apartment complex how reliable you are with paying rent.
However, if you are making a car payment then you are showing that you can handle different types of loans, including a car loan. Lenders like to see that many different types of lenders agree you are a good risk. Aim to add a store card, a revolving card, a small loan of some kind (student loans do not count), an auto loan and a mortgage if possible.
Obviously, if you are just starting out, you may only have a car loan. Just with a few cards and an auto loan you could see your score increase by dozens of points.
If you have poor credit but have a decent job, then consider getting a short-term secured credit card. Make sure the credit card is revolving, meaning it is a Visa or Mastercard.
The best cards to get will offer you the option to convert the card from a secured status to an unsecured status once you have a track record of making timely payments. Secured credit cards work by having you send in the money to the credit card company, who loads it onto your credit card.
In other words, you are sending them the money to place on the card for you to turn around and use. If you have had a terrible time getting a credit card, this is the best way to build your credit history.
Secured credit cards are not meant to be kept for more than a couple of years, so make sure you cancel it after your credit score has rebounded. Some of the better secured cards include OpenSky and DiscoverIt secured credit cards. You can have a score as low as 629 and still be approved.
It may seem counterintuitive if you are trying to save money but taking out a small loan of $500 -$1,000 dollars can also boost your score. You may wonder, “How is that going to fix my credit?” The strategy is to use the money you obtain from the loan to turn right around and make a few payments (at least four) to pay it off. The boost you see in your score will be significant. Then, with a high score, take out another loan and repeat the same process. Eventually, the loan amounts you begin to be approved for will grow.
Experian Boost is a free service offered by Experian, who lists all three of the reporting credit bureaus for consumers. Not only can you track your score and see how each strategy works, but you can enroll for free into their boost service. The boost service links to your bank account and when it finds recurring payments to a vendor, such as a phone bill payment, utilities or rent to your apartment, it will list it on your credit report as an additional account. If you have been very good at paying your bills for these services, then it can add to your overall credit history and give your score a “boost”. It can take up to three months for this to take effect, so plan to be patient.
Even if you have never considered starting a business, consider it. As a business owner you can apply for credit through your business, and often qualify for higher credit limits than you would if you were applying for a personal credit card. Starting a business allows you to repair your own credit by using your business as collateral. Learn how to start your own business and boost your credit rating through the Small Business Association.
Another way to fix bad credit, almost overnight, is to be placed on a friend or family member’s credit card as an authorized user. Make sure it is someone you know and trust because if they default on their payments, that is also reflected on your credit report as if you did it.
There are some criteria that must be met in order for this to work quickly. First, the owner of the card must have an account that is at least two years old, have an excellent record of making payments, and there must be little to no balance on the card (and is paid off each month). Placing your name on a great card like that will boost your credit repair within days.