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5 Fast and Easy Ways to Fix Your Credit Score

Credit score impacts your ability to borrow money and tells a story to lenders when you’re applying for financial products like mortgages, apartments, insurance, etc.

When ensuring your financial health, your credit score is one of the most critical factors you should always put first. But what does your credit score mean? Your credit score impacts your ability to borrow money and tells a story to lenders when you’re applying for financial products like mortgages, apartments, insurance, etc. Most employers would even look at your credit score to see if you’re smart with your finances. 

But, of course, not all of us have good credit scores. It could be understandable, however, because it’s easier for someone to tank their credit score than fix it. Fortunately, you can do many fast and easy things to fix your credit score and financial life. Here’s how.

Use a Credit Repair Service

Many hands make light work, and some people need help to start their journey. In your case, if you’re looking for some good help to fix your credit score, you could enlist the help of a credit repair service. These companies specialize in identifying the inaccuracies and mistakes in your credit report, such as late balances, misspellings, etc. 

It’s important because the mistakes and errors in your credit reports can significantly change your credit score. One good example is late balances that don’t belong to you. It might seem silly to you, but this type of case is quite common. 

What happens is that if you have a late balance that doesn’t belong to you, it will be included when credit bureaus calculate your credit score. That said, while this option can cost you money, it’s still a good investment, especially if it’s been a while since you have taken a peek at your credit report.

Get a Handle on Your Bill Payments

More than 90% of lenders use the FICO scoring system to make credit decisions for their borrowers. If you don’t know what FICO is, it’s one of the systems that credit bureaus use to calculate your credit score. It’s usually divided into several categories.

  • Payment History: 35%
  • Credit Usage: 30%
  • Age of Credit Accounts: 15%
  • Credit Mix: 10%
  • New Credit Inquiries: 10%

As you can see, the biggest factor in this computing system is the payment history. That’s why you need to focus most of your time on bills. If you have bills like personal loans, payday loans, or tribal loans that you have to pay for, you need to be responsible for paying them with the right amount and on time. You can even boost your credit further if you pay more than the minimum amount, which makes your repayment faster and, of course, getting rid of that debt sooner. 

You can further boost this by charging your monthly bills on a single credit card. This way, it’s easier to manage, and if you pay on time, you’re paying on time on several different accounts, which can help you boost your credit score.

Aim for Less Than 30% Credit Utilization Rate.

Credit utilization refers to the amount of money you spend on your credit limit at a given time. It refers to the credit usage category in your FICO score. Of course, the less portion you use on your credit limits, the higher your FICO score will be. A good threshold of your credit utilization is 30%. You’re already good to go as long as you don’t use 30% credit across all your credit. 

Of course, you can do this by paying your credit balances before your lender submits their report or asking your lender to increase your credit limit. This way, you can keep your credit utilization rate below 30%, increasing your credit score.

Keep Old Accounts Open

If you have old credit accounts that you’re not using, don’t close them yet. Even though you’re not using these accounts anymore, their credit history is still used when calculating your credit score. It’s especially important if there are various financial accounts, as they could be included in your credit mix. Credit mix refers to the diversity of your financial accounts. The more diverse it is, the higher your score will be. 

Not only that, but old credit accounts are also included in your credit utilization rate. If you close these credit accounts, your credit utilization will go over 30%, depending on how big these credit limits are.

Consolidate Your Debts

This one is true and tested. If you have several debts on your financial profile, you can consolidate them into a single loan and pay it on time. This would make it easier for you to manage your loans. It would also help you pay off your debts faster since you only have to manage one loan, which means one repayment and one interest rate. 

The only thing you must look out for is that some loans have balance transfer fees, which can cost quite a lot.

Final Words

While there is no such thing as an instant way to fix your credit score, the tips we discussed above will set you on the right and faster way to repairing your financial life. Through determination and wit, you’ll be able to fix your credit score fast while also relieving your financial burden significantly as a bonus.