Four ways to improve your credit score
If you're unhappy with your credit score, follow these four steps to take your score from 'fair' to 'good'.
If you're unhappy with your credit score, follow these four steps to take your score from 'fair' to 'good'.
So you鈥檙e not too proud of your credit 鈥斅爅oin the club. More people would rather reveal聽their weight than their credit score, according to a 2014聽poll聽by the National Foundation for Credit Counseling.
Luckily, credit scores aren鈥檛 fixed, so there鈥檚 always an opportunity to improve yours. The time it takes to raise your 鈥渇air鈥� credit score聽to 鈥済ood鈥� depends on how low your score is and what you do to improve it.
鈥楩air credit鈥� vs.聽鈥榞ood credit鈥�: Why it matters
A fair聽FICO score聽(or聽VantageScore, its main competitor) is around 630-689, and a good credit score is about 690-719. However, these ranges aren鈥檛 absolute. Every issuer or lender can determine what credit scores it deems acceptable for a given loan or credit card. If you have so-so聽credit, you aren鈥檛 doomed; there are聽credit cards for fair credit聽that will still give you rewards and signup bonuses.
But if you boost your credit above 690, you will be eligible for a much wider range of rewards, balance-transfer, cash-back and low-interest cards. To get started, find out what鈥檚 holding your score down聽in the first place. This information is on your credit report, which you can request from each of the three major credit bureaus 鈥� TransUnion, Experian and Equifax 鈥斅爁or free every year.
How to improve your credit score
A quick way to improve your score is to find an error in your credit report and聽dispute it. Once the reporting agency corrects it, your score could improve within a month or two.
Unfortunately, other factors that may be weighing down your credit score can take much longer to remove.
Inquiries, or requests from lenders to examine your credit, stay on your report for two years.
Delinquencies, or聽late payments, and records of overdue debt from collection agencies stay on your credit report for seven years. Bankruptcies and tax liens remain for up to 10 years.聽While you wait for those negative marks to disappear from your report, take聽these basic steps聽to ensure your credit score doesn鈥檛 slide any further:
- Pay off any outstanding credit card debt ASAP.聽When possible, pay more than your minimum payments to erase the debt faster.
- Automate your credit card payments.聽This will prevent you from forgetting another payment.
- Charge less to your credit card.聽It鈥檚 harmful to your credit to even approach your maximum limit.
- Negotiate down聽your annual percentage rate.聽A lower APR could聽save you hundreds or even thousands of dollars in interest, so a聽successful聽renegotiation can聽help you repay your debt more quickly.
No matter how desperate you are to improve your credit fast, the聽Federal Trade Commission warns聽not to give in to scams that promise to eliminate bad credit or remove negative parts of your credit report. These ads are likely written by fraudsters out to take your money.
This article first appeared at NerdWallet.