Your credit score impacts many aspects of your life, such as borrowing money, getting a mortgage, and renting an apartment. If you have a low credit score from things like previous auto loans and late payments, or even student loans that have accumulated and been paid late over the years, there is no reason to give up! You can take control of your finances and increase your credit cards for the future. keeping reading for how to improve credit score in 30 days.
In this article, you will learn 10 tips to improve your credit score in as little as 30 days. While these ideas may be good for some, it's a good idea to be aware of your overall finances, budget, and available funds in your bank account. A good credit history is just one aspect of managing your finances successfully.
Here are some of the best way (s) to improve your credit score. While some of these may take time, you can get started today!
Improving a Low Credit Score
1. Fix errors on your credit report
To successfully increase your credit score, you must check your credit report to ensure there are no mistakes.
Common mistakes include:
- Incorrect personal information.
- Misspellings of your name or address.
- Accounts that do not belong to you.
- Unfamiliar accounts or credit inquiries.
- Payments made on time but recorded as late.
- Inaccurate credit limits.
- Accounts attached to debt collection agencies.
- Closed accounts reported as open.
Inform the major credit bureaus immediately and provide evidence to support your dispute. It's important to note that accessing your credit report will not affect your credit score. You can check online for a free credit report, but be sure that you are using a reputable, legitimate website! There are scam sites out there and they may gladly take your personal information. We always recommend searging a government website (any .gov) link such as the Federal Trade Commission, and then using their links to official agencies. Otherwise, use well known websites such as Experian. An important thing is to look at the web link, and always view the entire website, including scrolling down to the bottom of the page. Any scam pages will have easily visible misspellings and information gaps. If wanting to know how to improve credit score in 30 days, this is the first thing you should do.
With any official website you can get your credit record quickly and eaily.
2. Pay your bills early
Payment history is the most significant factor in boosting your credit score, making up 35% of your credit score calculation. Simply paying your bills on time can dramatically affect your credit score. While this has a significant impact, it does take some time to pay your bills on time and go about building credit. Consider this a longer term solution to raising yoru credit score!
3. Pay twice a month
Paying bills at the end of the month is normal, but consider making smaller payments every two weeks. This reduces your balances faster and can improve your credit utilization ratio, positively impacting your credit score.
Why can it reduce your balance faster? Interest rates almost always accrue in 1 month increments, so if you pay more than once a month, you are paying on the principal balance rather than interest. For any once a month payment, interest is paid first. So, you can reduce your overall balance on old cards if you pay more than once a month.
For example, paying your credit card balance twice a month at a slightly higher rate can help you pay down your debt faster and save on interest charges. Aim to make these payments before your statement arrives from the credit card company. Keep in mind, a first step is to ensure you have enough room in your budget to pay extra on previous credit card balances.
4. Don't rely on credit cards
Only use a credit card if you can afford to pay the balance in full every month. Relying on credit cards is unhealthy, and credit card debt can quickly spiral out of control due to the astronomical interest rates.
If you have multiple credit cards, especially store cards, an easy strategy is to narrow down your accounts to the ones you absolutely need. Close any old or unused accounts. Not only is it easier to keep up with bills, but you can avoid paying by card for unnecessary expenses at multiple stores. Hopefully, it can lead to smarter spending and help avoid adding much debt as you move foward.
5. Use a secured credit card
If you have difficulty managing your spending, another option is a secured card. A secured credit card is a safe way for credit card issuers to offer credit. It's a great way to establish, improve, and even rebuild your credit.
Secured cards are similar to debit cards because you must pay a deposit to determine your credit limit. For example, if you deposit $400, your credit limit will be $400.
Using the card regularly and making repayments on time will show lenders that you are responsible and help increase your credit score.
6. Improve your credit utilization
The credit utilization ratio is the percentage of credit used from the total credit limit. This ratio is the second most important factor influencing your credit score.
For example, if you have a credit card with a $10,000 limit and spend $5,000, your credit utilization is 50%. In this scenario, you want to pay down the balance and use less than 30% of your available credit. If you're near your credit limit, use other lines of credit to spread out the balance or increase your credit limit to improve your overall credit ratio.
7. Add new credit
Not having enough credit can hinder your credit-building efforts, so aim to add new lines of credit and use them responsibly.
However, you should only apply for new credit if you can afford it. Opening too many new accounts quickly can indicate that you are in financial distress. This should be a short term solution only, and never used unless you have room in your budget to pay off any and all cards within a short timeframe. Remember, with new lines of credit come new interest rates and payments!
8. Use old credit
If you have an older credit account, use it regularly to keep it active.
Most creditors prioritize the most recent two years of activity over the rest of your report. If you have a credit account that hasn't been used for a long time, use it and then pay the balance.
For example, use your credit card to pay for a subscription service like Netflix, then pay your credit card promptly a few days later. Having a card you've used for many years is ideal. If you are closing credit cards, it's a good idea to close the newest accounts first.
9. Don't make too many credit applications
When a potential lender looks at your credit report, a hard inquiry is noted, which typically remains on your credit report for one year.
Multiple hard inquiries in a short period can be a red flag for lenders, but the good news is that they only have a small impact on your credit score. What is a hard inquiry?
Inquiries for car loans, mortgages, or utility providers are generally treated as one inquiry if you make multiple applications between 14 and 45 days. This lets you compare different lenders and find the best deals.
Soft inquiries will not affect your credit score. This includes requesting your credit report or checks for employment, insurance, or rentals. So if you've heard it hurts your credit to obtain a free credit check online, that technically is not accurate.
10. Avoid debt
Owing less debt is good for your credit score and makes you more attractive to prospective lenders.
Lenders want to see a good debt-to-income ratio before lending you money because a good credit score is worthless if you cannot afford to repay credit.
If you owe money to a creditor, a debt collection agency will get involved. An account in collections causes the most damage to your credit score. If there is anything you can take away from these tips, it's that collections agencys will cause a negative major impact to your credit. Do what you can to avoid letting bills go to any collection agencies. If you are needing extra time, always reach out to your lender and see what can be done. In some cases, such as medical or utility bills, they may be able to take a partial payment to avoid collection agency fees. Keep in contact with your billing agencies to avoid any surprises, and put all bills in a place in the house they will be seen and paid on time! These are easy ways to improve a poor credit score due to unpaid bills.
Take the 30-day credit score challenge
In the world of personal finance, there is no single issue that is more misunderstood than credit. Implement these strategies today to raise your credit score and start seeing improvements soon! We hope these tips help you understand how to improve credit score in 30 days.
Disclaimer: These strategies are general information and from personal experience only. For any major difficulties, please reach out to a credit or legal expert. Thanks for reading!