How to Quickly Fix a Bad Credit Score (Mine Was 520)
The first time I checked my credit score, I had a 520. In case you're not familiar with credit scores, 520 is pretty bad—bad enough that you can't even purchase a cell phone, let alone a car or home. That score haunted me for a while until I decided to do something about it.
Within about 18 months, I was able to fix my credit score. In this article, I'll teach you how to do the same.
Before you can fix your bad credit, though, you need to asses what you're up against. The first thing you need to do is get a credit report. This will allow you to see if there are any mistakes and will show you exactly what is bringing your score down.
1. Pay off Your Credit Card Debt
I was using an extremely high percentage of my available credit card debt. The limits on my cards were low: $750 on one and $500 on the other. Out of the $1,250 that I had available, I was using about $1,200. This is a huge no-no if you want a good credit score. I was using over 95 percent of my available credit.
On top of this, I was way behind on payments for both cards and had to stop making so many late payments.
I saved up and paid off all of my debt. With that done, my credit score received a boost of almost 100 points.
2. Increase Your Limits
If you can increase the limits of your cards, do it. This will really help your score, as long as you continue to utilize debt.
For example, over the last few years, I have increased the limits of my cards to over $20,000. If I run a balance of $1,200 now, it hardly affects my score. That's because $1,200 is only six percent of my available credit, instead of 95 percent.
In other words, you can change your credit score very quickly by raising your limits.
3. If You Don't Have Credit Cards, Get Some
To boost your credit score, you really need to have revolving credit. People often think since they have a car or home loan, they are building credit, but this won't do nearly as much good as having some frequently used credit cards.
Before I had credit, it was very difficult to get a credit card. I was unable to get approved and had to take out two secured credit cards to get the ball rolling. Soon, I was able to get real credit cards. Once a credit card provider sees someone else took a risk on you, they are more likely to take a risk themselves. You must make sure, though, to make payments on time if you want to maintain a good credit score. Commit to never missing another payment.
4. Avoid High-Interest Loans
In order to stay ahead of debt, I have prepared some simple advice:
- Commercial mortgage loans are better than no credit check personal loans. Why? Because the interest rates are lower.
- Home loans are better than auto loans. Why? Again, because the interest rates are lower.
Do simple comparisons to identify and get rid of the highest interest debt you have. This will make it easier to get rid of the rest later.
How to Check Your Credit Score for Free Online (Video)
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.