If you have a bad credit score, it can prevent you from being approved for a new loan or credit card at the best interest rate and terms. When you are approved for credit, your interest rate is likely to be high, which can cost you hundreds or thousands of dollars as time passes. If you have a bad credit score, it’s time to get to work bringing it up. Here are some tips on how to fix a bad credit score ASAP.
Make On-Time Payments
A single late payment stays on your credit report for seven years and can continue to impact your credit score during that time. To bring up your credit score, you’ll need to establish a history of making on-time payments. Any loans or credit cards that are past due need to be caught up as soon as possible.
Once your bills are current, be careful not to make any late payments. Set payments up on automatic draft so that there’s no chance of forgetting to make a payment or sign up for alerts with your bank to remind you when due dates are approaching. If your credit score is being affected by other expenses such as medical bills, instead of trying to avoid paying them, contact your creditor to work out a payment plan.
Catch Up on Past Due Bills
If you currently have bills that are past due, you need to make it a priority to get them caught up. If any of your bills are more than 30 days past due, they will remain on your credit report for seven years but the impact of late payments will lessen over time. If you’re having difficulty catching up on past due bills, don’t try to dodge your creditors. Talk to them to find out what your options are. Many will be willing to set up a payment plan to help you find a way to get caught up.
Pay Down Credit Card Balances
To bring up your credit score ASAP, pay down credit card balances as much as possible. The goal is to avoid having an outstanding balance that’s higher than 30 percent of your available credit on revolving accounts. Try making payments twice a month to bring down your balances quickly.
To reduce your overall debt, there are different approaches that can help. Focus on paying off accounts with the highest interest rate first to save money on interest. Another option is to focus on putting any extra money toward one account at a time, paying off the smallest balances first. This is called the snowball method.
Avoid Over-Borrowing
Don’t rely too much on credit cards to make ends meet. The more you increase the amount of your debt, the more difficult it can become to make your payments on time.
Avoid continually applying for new credit. Whenever you apply for a new loan or credit card, the new creditor pulls your credit report. This is known as a hard inquiry, and it’s reported on your credit report. New accounts can also lower the average age of your accounts, which is another factor in your credit score.
Dispute Errors on Your Credit Report
Errors on credit reports are surprisingly common. When you’re working to repair a bad credit score ASAP, make sure you review your credit reports and dispute any errors you find right away. When inaccurate information is removed from your credit report, it can help to improve your credit score quickly.
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