Getting over this hump is something that may feel like it takes forever to do, but there is a way to rebuild credit quickly. Credit scores enhance the chances of obtaining credit facilities such as loans and credit cards, as well as securing tenancies and even employment.
The following are some of the most efficient ways through which one can recover and rebuild credit scores in the shortest time possible.
1. Review Your Credit Reports
The initial action is obtaining copies of credit reports from the three major credit bureaus including Equifax, Experian, and TransUnion. You should review any data that may be incorrect or contain some sort of fraud or information that is old that may be pulling your score down. Challenge these first in writing to the credit bureaus. They have the legal obligation to investigate such cases and eliminate any misinformation that has been entered into the system. This can help in fudging your score in the short run.
2. Pay Down Revolving Debt
Probably the next biggest component of credit score is payment history and credit utilization, which is the balance owed about the credit limit. It is advisable to keep this percentage well below 30%. It also emerges that one should try to pay down credit card and revolving debt to reduce utilization and consequently improve the score. Any advancement is relatively fast as compared to the previous condition, even if it is only a slight advancement. The tips on how to manage credit cards include avoiding charging more than the minimum required and avoiding high balances.
3. Become an Authorized User
Find a close friend or a relative who has no adverse credit history and they will become an authorized user of one of their credit cards. This enables the account activity of these people to be reported in your credit reports. This means that if you do not want to use the card there is no reason to be scared since it cannot be used on you. Even just being associated with a good payment history can rapidly raise your score by tens of points.
4. Limit New Credit Applications
Sometimes, people attempt to add more credit cards in ones it increases the total credit which can reduce credit utilization but this is not good when one applies for many cards in a short time. Every time you apply, you make a ‘hard inquiry’ on your reports like the three mentioned above and this will reduce your score. Avoid multiple applications especially if they are to be done within a short period, for instance within the next six months, only apply for one card then wait for six months before you apply for another one.
5. Use Secured Cards Wisely
A secured credit card works like a debit card since it demands an initial cash deposit that will be used as the credit line. Some of these cards report to the credit bureau each month and help you to rebuild your credit when you pay on time. It is helpful to take them, however, the balance should be kept low and payments made on time. After about a year of use and making monthly payments on time you are allowed to request for an upgrade and receive back your initial deposit as well as being given a normal unsecured card.
6. Address Payment History Errors
This percentage reveals that payment history is a significant component of your credit score. If some of the payments are made late but are not incorrect, you can dispute the negative items on your reports. Include evidence of payment such as canceled checks or bank statements authenticating timely payment. This is because if the inaccurate data regarding the payment is eliminated then the score can again improve sharply.
7. Get Credit Limits Raised
When you are rebuilding credit through high credit utilization and maintaining your accounts in good standing, ask your credit card companies for a credit limit increase after at least six months to a year. Further, it reduces your overall usage by increasing your total available credit limits on your cards. Paying higher limits proves to the creditors that you are capable of managing more available credit wisely.
8. Setup Payment Reminders
If payments are missed the score drastically reduces and nullifies any rebuild that has been planned. Select your preferred method of payment through your preferred bank and calendar and phone reminders to ensure that you pay your bills on time to gain hits. It is also advisable to set alerts regarding when the balances are getting too high.
Credit repair is a slow process and requires a lot of patience but with the help of these effective tips below, the time frame for repairing credit could be shortened. It generally takes about a year or so of hard work and dedication to rebuild a credit score and raise it to something significant. Keep an eye on your reports and give yourself a monthly score to assess your progress and feel like you are back on track to a proper credit history.
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