Losing points from your credit score is a lot like getting kicked in the shin. And getting them back is like pulling teeth. But if you know how credit scoring works, you can hack the process to rehabilitate your numbers faster. Want to know how to fix your credit score? Here are four effective strategies to do just that.
Pay Your Credit Cards Twice Each Month
Even if you pay your balances in full every month, using up too much of your available credit at any given time can hurt your scores. You can lessen the damage by making two payments each month: one just before the card’s statement closing date and another just before the due date. The first payment typically reduces the balance that’s reported to the credit bureaus, while the second assures that you don’t wind up paying interest or incurring a late fee on any remaining charges. If you’re wanting to know how to fix your credit score, this is one of the easiest places to start.
Dispute Old, Small Collection Accounts
The latest version of the leading credit scoring formula, the FICO 10, already ignores collection accounts where the original balance was less than $100. Not all lenders use this formula, though, so you might see an increase in your scores if you dispute that $50 parking ticket you forgot to pay or the $75 medical bill that slipped through the cracks of your insurer’s reimbursement system. The collection agencies that report these minor bills may not bother to respond to the credit bureaus’ investigation attempts, especially as the accounts approach the seven-year mark, where they’d have to be dropped from your credit reports anyway.
Get Added as an Authorized User on Someone Else’s Account
Another person’s good history with their credit card could be imported into your credit bureau files to help burnish your scores. Plus, the other person doesn’t have to give you access to the account — you can be an authorized user in name only. Some card companies will allow this importing only if you’re a relative, so check in advance.
Pay Off Your Credit Cards with a Personal Loan
Paying down your credit card balances widens the gap between your available credit and the amount you’re using, which is great for your scores. If you can’t pay your cards off immediately, consider moving the balances to a three-year personal loan. Note, you’ll want to pay extra attention to the loan’s interest rate and any other associated fees to make sure going this route makes financial sense. Balances on such installment loans don’t affect your scores as strongly as balances on credit cards.
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