If you are looking at the most significant and immediate credit score boost then getting rid of errors in your credit will do that. As soon as you have done that it will take a bit of time to see the improvements in your rating. Now your job will be to maintain good habits so your score does not take a hit. If your score is below the 700 marks, I recommend you keep up the good behavior because it will pay off in the long run. Next time you decide to borrow money or get a loan, the price will be much lower with a good score.
Are your bills getting paid on time?
The best thing you can do for your score is to make sure you are up to date with your due dates. My favorite thing to do is sync all my calendars together so I never miss my due dates.
Nowadays it is so easy to do, there is not a person that does not have a smartphone and can easily download apps to help keep them organized. It takes about 6 months of an on-time track record to see a big boost in your ratings. Staying on top of your due dates is crucial to getting the top score.
If you accidentally missed a credit card payment do not freak out just yet, it takes more than one late payment to put a big nick on your score. Just make sure you make next month’s payment on time. If you have a credit card many of them offer free credit scores, but be careful because each time they check it can bring your score down. I would call and talk to them if you see it impacting your score.
Do you know what the “utilization ratio”, is when it comes to your credit score? This is the difference between the amount of your charge on your credit card vs. the amount of your credit limit. This is a huge factor when it comes to your score and how it impacts you in the long run.
Your best bet will be to look at your credit limit and keep the spending under 30% of the total limit. Not only are lenders and creditors looking at how much you owe on each card relative to the limit, but what you owe in total to the sum of all your credit cards.
What should I pay off first?
So you finally have decided you want to start paying off some of your debt. The first issue is deciding between your credit card or your student loan debts. In my personal experience paying off my student loan has helped my score dramatically.
The way I see it and how it works is that paying off student debt will boost your score 100 points compared to a few points you will get by paying off your credit cards first. Also, I noticed that the points for paying off student debt showed up faster than credit card payoff.
Secured Cards and Credit Scores
Did you try to get a regular credit card and get denied? Well, your next best option is to get a secured card where it will take money off your bank account. I know this might not be ideal but you can get it and use it for small purchases. This will help you build your credit by showing banks that you are paying things off as you buy them.
Not only will you be able to get a regular card in 6 months, but your score will improve as well. Your length of credit history is 15% of your score. So the longer you can have a secured card and do small payments the more it will pay off in the long run.
As you use your new secured card try not to open too many “new credit” accounts. What this means is in a short time do not go credit card crazy and apply for like 10 accounts. This includes store credit cards as well. The store credit cards are a big no-no for those struggling to raise their score. They are the ones that leave the biggest ding out of your score. When you open too many new accounts in a short amount of time it is a risky behavior to many lenders and creditors, so keep an eye out for that.
Credit cards can help you but as well as destroy your credit score!
The types of credit you have in your history can work for you or against you in the long run. If you have only credit cards this can be a big risk for future lenders. They want to see that you have other things on your reports such as auto or mortgage loans. Here is a quick tip if you are having an issue raising your score to try to stay away from a mortgage loan for now.