Your credit score often decides whether you qualify for a credit card or loan, and 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 forever determine your credit eligibility, 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 raise credit scores quickly in less than a month. Here’s how to quickly raise your credit score.
1. Pay all overdue bills
Whatever late bills you have, pay them as soon as possible this month to avoid late payments on your credit report, which can stay for up to seven years. Even if you’re late paying your credit card bill and incur a late fee, you can avoid credit damage by submitting a payment before you’re 30 days late. A creditor cannot report late payments to credit bureaus until your account is more than 30 days old.
Your payment history makes up 35% of your credit score, so you can increase your credit score by making payments on time. If mailing a payment can delay it, make the phone payment or pay online the same day.
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2. Pay all your current bills for the month
Pay all your current bills for the month on time – and don’t miss any more payments, said Whitney Lee, independent financial advisor at oXYGen Financial. “Even one missed payment will mess up your credit report and damage your scores, so fix that now.”
Create alerts or reminders set for a few days before payment is due, or make payments as soon as you receive your new monthly statement. You can also avoid missed payments by scheduling automatic recurring payments from a checking or savings account. Putting your money on autopilot is convenient and helps prevent late fees – just make sure you have enough money in your bank account.
3. Use the power of negotiation
Never underestimate the power of bargaining, especially if you’ve been a good customer before, said Yahya Mokhtarzadeh, founder and CEO of TrueBill, which helps track and manage subscription and recurring billing services. Depending on the reason for your late payment, a single phone call can completely wipe your history.
“If your bills have accumulated after a period of non-payment and now have a black mark on your balance, you can ask [creditors] To remove late payments from your credit report, or at least identify the paid account as agreed once you pay the remaining balance.” If your creditor agrees to remove a defect from your credit report, make sure you 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 a certified user of a relative or close friend’s credit card. The primary account holder must add your name as an authorized user in order to be able to obtain a credit card in your name. “This is the easiest and safest way to build credit quickly,” said Roman Stein, CEO of RewardExpert, a free service that helps people spend more to earn discount airfares.
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 the person you choose manages credit responsibly: How the primary account holder manages the account has a direct impact on your credit score. If he maintains a high balance or does not make payments on time, your credit score will be affected.
5. Pay off balances every month
Maintaining credit is not the way to build credit. “Make a purchase and pay off the full balance each month also builds credit, and it is considered better than holding a balance,” Lee told me.
Remove this current balances and each month to increase your credit score – because the amount you owe makes up 30% of that number. Additionally, your credit utilization ratio — your credit card balance compared to your credit limit — is a key component of your personal score. To increase your score in a month, reduce this percentage.
If you can’t pay off your credit card balances in full, 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 the minimum; Ideally, you should only spend what you can afford and pay off your credit cards each month.
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6. Request a credit card limit increase
You can improve your credit utilization ratio – and therefore your credit score – by asking your credit card company to increase your credit limit. If you have a $2,000 credit line and a $1,000 balance, your credit utilization ratio is 50% — which hurts your credit score. But if you can increase your limit to $3,500, your utilization ratio drops to 28%, giving your credit score a quick boost. “All of this typically requires a phone call to your credit card issuer to request an increase in your credit limit,” Stein said.
Although increasing the credit limit helps your credit, you should only order one if you have self-control. Stein warned that spending the maximum of your new credit limit negates the purpose of keeping the ratio low. “Don’t use the new increase in purchases; just let the new credit increase do its work for you in your credit score,” he told me.
7. Dispute errors on your credit report
Creditors sometimes make mistakes — like accidentally reporting a high credit card balance or a late payment — so frequent credit monitoring can’t be overemphasized. Inaccuracies can lower your score, so check your credit score and report regularly to spot fraudulent activity and errors early.
“If you find inconsistencies, you can dispute the error yourself or hire a credit repair company that can clear several errors within one month,” said Lori Askins, vice president of public relations and marketing at BR Finance Solutions, a credit repair and finance firm. “By removing negative inquiries, you can increase your credit score by 100 points or more.”
Some people don’t think about credit until they apply for a loan or credit card. But this is the worst time to learn about a low credit score. A low score can be frustrating and disabling, but it is fixable. In just a few steps, you can improve your assessment and add points to your score within a month.
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This article originally appeared on GOBankingRates.com: 7 Ways to Increase Your Credit Score This Month