How to Boost Your Credit Score in 5 Easy Steps |
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by: Janna Weiss
In today’s harsh credit crunch, your credit score is more important then ever. Fair or good credit won’t cut it any more. To have a chance of getting approved for big-ticket items like car loans and mortgages, you’ll need to clean up your credit. Here are five steps you can take to boost your credit score - fast.
Step 1 – Order your credit report.
Before you can raise your credit score, you have to know what it is. Get a free copy of your credit report from annualcreditreport.com or order your credit score from myfico.com. You’re entitled to a free copy of your credit report each year, or any time you’re denied for credit. While these free reports might not contain your credit score, they will give you some insight into what’s bringing it down.
Step 2 – Dispute errors on your credit report.
Most credit reports contain errors. Your credit score could be suffering because of negative items you weren’t responsible for. You can dispute these errors by following the guidelines at the Federal Trade Commission web site.
Step 3 – Pay down your credit cards.
Having a lot of available credit is good for your score, but having a lot of debt will bring it down. The best scenario is to have several credit cards that have very few charges. If your cards are almost maxed out, your score could drop by a hundred points or more. Pay down your balances as quickly as you can, and resist the temptation to use the cards while you’re trying to pay them off. You don’t want to sabotage your efforts.
Step 4 – Don’t apply for too many cards.
If you have a substantial amount of debt and apply for more credit cards, lenders might take this as a sign that your spending is out of control. Don’t apply for more than one card every six months. Each credit card application you submit will be logged on your credit report, and each one can ding your score by a few points.
Step 5 – Make your payments on time, every time.
Even if you can’t afford more than the minimum monthly payment, make sure you pay your credit card bills on time. Each time you’re late by 30 days or more, your credit report will reflect a negative item in your payment history. If your credit card account is closed due to non-payment, it can haunt your credit for up to 7 years.
Of course, the best way to pull up your credit score and get out of debt is to make more than the minimum required payment each month. If you can double or triple the minimum amount, do so. The faster you pay down your card balances, the faster your credit score will rise.
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