Your credit score often determines whether you qualify for a credit card or a loan, and it determines your interest rates. Credit scores range from 300 to 850, and lenders use this number to assess credit risk. So the higher your credit score, the easier it is to qualify for financing.
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But a low credit score doesn’t have to define your creditworthiness forever or prevent you from getting the credit you need. It can take several months or more to go from bad credit to good credit, but there are strategies to quickly boost credit scores in as little as a month. Here’s how to quickly boost your credit score.
1. Pay all your overdue bills
Whatever overdue bills you have, pay them as soon as possible this month to avoid late payments on your credit report, which can last up to seven years. Even if you pay a credit card bill late and incur late fees, you can avoid credit damage by submitting a payment before you’re 30 days late. A creditor cannot report a late payment to the credit bureaus until your account is 30 days past due.
Your payment history makes up 35% of your credit score, so you can boost your credit score by making payments on time. If sending a payment by mail might cause a delay, make a payment by phone or a same-day payment online.
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2. Pay all your regular bills for the month
Pay all your regular monthly bills on time and never miss a payment again, says Whitney Lee, independent financial advisor at oXYGen Financial. “Even one missed payment will create a stain on your credit report and hurt your score, so fix that now.”
Create alerts or reminders set a few days before a payment is due, or make payments as soon as you receive your new monthly statement. You can also avoid missed payments by scheduling recurring automatic payments from a checking or savings account. Putting your finances on autopilot is convenient and helps avoid late fees. Just make sure you have enough money in your bank account.
3. Use the power of negotiation
Never underestimate the power of negotiation, especially if you were a good customer before, said Yahya Mokhtarzada, founder and CEO of TrueBill, which tracks and manages subscription services and recurring bills. Depending on why a payment is late, a phone call can potentially wipe your slate clean.
“If your bills are piling up after a period of non-payment and are now a black mark on your credit, you can request [creditors] to remove late payments from your credit report, or at least mark the account paid as agreed once you have paid the remaining balance,” Mokhtarzada said. If your creditor agrees to remove a stain from your credit report, be sure to get that agreement in writing this month.
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4. Become an authorized user
You can also improve your credit score by becoming an authorized user on a relative or close friend’s credit card. The primary account holder must add your name as an authorized user in order for you to receive a credit card in your name. “It’s the easiest and safest way to build credit quickly,” said Roman Shteyn, CEO of RewardExpert, a free service that helps people maximize their spending to earn discounted travel.
This credit account will appear on your credit report almost immediately; you will inherit the positive credit history of the primary account holder. But make sure whoever you choose handles credit responsibly: How the primary account holder handles the account has a direct impact on your credit score. If he keeps a high balance or doesn’t make payments on time, your credit score will suffer.
5. Pay off balances every month
Carrying a balance is not the way to accumulate credit. “Making a purchase and paying off the full balance each month also builds credit, and is viewed more favorably than carrying a balance,” Lee said.
Eliminate existing balances this month and every month to boost your credit score because the amount you owe is 30% of that number. Additionally, your credit utilization ratio – your credit card balance compared to your credit limit – is a key part of your personal score. To increase your score in a month, reduce this ratio.
If you can’t fully pay off your credit card balances, pay them off so you don’t owe more than 30% of your credit limit. Use your personal savings to reduce balances and pay more than your minimums; ideally, you should only spend what you can afford and pay off your credit cards every month.
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6. Ask for a credit card limit increase
You can improve your credit utilization ratio – and therefore your credit score – by asking your credit card company for a line of credit increase. If you have a credit limit of $2,000 and a balance of $1,000, your credit utilization rate is 50%, which hurts your credit score. But if you can raise your limit to $3,500, your utilization rate drops to 28%, giving your credit score a quick boost. “All of this usually takes a phone call to your credit card issuer with a request to increase your credit limit,” Shteyn said.
Although a credit limit increase improves your credit, you should only ask for one if you are in control of yourself. Shteyn warned that spending the maximum amount of your new credit limit defeats the purpose of keeping your ratio low. “Don’t use your new raise on your purchases; just let the new credit boost do its job for you on your credit score,” Lee said.
7. Dispute errors on your credit report
Creditors sometimes make mistakes – like reporting a higher credit card balance or late payment by mistake – so frequent credit monitoring shouldn’t be overemphasized. Inaccuracies can lower your score, so check your credit score and report it regularly to quickly uncover fraudulent activity and errors.
“If you find any discrepancies, you can dispute the error yourself or hire a credit repair company that can remove many errors in a month,” said Lori Askins, vice president of public relations and marketing at BR Finance Solutions, a credit repair and financing company. . “By removing negative inquiries, you can increase your credit score by 100 points or more.”
Some people don’t think about credit before applying for a loan or a credit card. But this is the worst time to find out about a low credit score. A low score can be frustrating and embarrassing, but it’s fixable. With just a few steps, you can improve your rating and add points to your score within a month.
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This article originally appeared on GOBankingRates.com: 7 Ways to Boost Your Credit Score This Month