If you’re drowning in debt, you may feel alone and worried about how you’re going to climb out from under the pile of bills. But in reality, tens of millions of Americans have enough outstanding debt to make it hard (or downright impossible) for them to obtain loans or credit lending with reasonable terms. And even if you’re not one of those in the most dire of straits, you may want to improve your credit if only to improve upon the terms of your current or future loans. Improving your credit isn’t something that can be done overnight; but with determination and a bit of effort, you should be able to see continual progress.
Start Off Strong
The path to an improved credit score should begin with a request for a free copy of your credit report. Once received, scan it for errors which may be affecting your credit score in a negative way. Credit reports contain the information required to calculate your current credit score, and even small infractions or errors can affect the outcome. Among the most common errors listed on a credit report are mistakes in sums owed or reports of late payments that were actually made on time. If you find errors on your credit report make sure to report them to the reporting agency and credit bureau immediately. And if you only have one or two late payments, you may want to ask the lender(s) to expunge them from your record as a courtesy, since these blemishes can affect your credit for years after you’ve ameliorated the problem.
Once you’ve taken a good look at your financial report, you can begin focusing on long-term action items. Set reminders to pay your bills on time so that you never have another late payment – and if you can’t make the full payment on time, make sure to at least pay the minimum. Committing to a healthy payment schedule will help you stay on the road to an improved credit score.
Use Your Credit Cards Wisely
Many people think that having a credit card will instantly lower their credit score, but this simply isn’t true. In fact, using a credit card appropriately can be a way to improve your credit. If you don’t currently have a credit card, you may want to register for one and use it lightly, just to show that you’re a conscientious consumer. If you do have one, make every effort to use restrict your usage on the card so that you can afford the monthly payments. If you already have credit card debt, try paying back a little bit extra each month so that you can prove your desire to improve your credit. No matter what financial situation you’re in, there are ways to use a credit card to your advantage.
Another way to use credit cards to improve your credit score is to start using an older credit card that you’ve stopped using. The idea behind this is that the older your credit history, the better. So if you can prove you’ve been using the card responsibly for years, you’ll have a better chance of improving your credit. Just make sure to pay off the balance each month, or you’ll wind up hurting your credit instead of helping it.
Lastly, it’s worth noting that the stronger your credit score, the harder it will be for these suggestions to work. If, for example, your credit score is over 700, you may improve a few points, but will not likely see dramatic improvement in your credit score. On the other hand, if your score is between 620 and 700, the steps above should help you see steady improvement in your credit score if implemented consistently over time.