If you’ve had high balances on your credit card, overdue loans, or been in foreclosure, you might have a bad credit score.
As a result, lenders will charge you higher interest rates, and they might not approve your loan at all, making it hard to borrow money when they need to. You might even have trouble applying for new credit cards with a particularly bad credit score.
If you want to avoid paying higher interest rates and get the best credit card deals, read more on how you can fix your credit score!
5 Ways To Fix Your Credit Yourself For Free
A good credit score is in the range of 670-739, and anything above that is considered excellent.
However, sometimes people make bad financial decisions that leave them with a credit score that falls way below that range. This makes them a default risk, so banks and lenders ask for exorbitantly high-interest rates for lending to them despite the risk.
The good news is that there are steps you can take to get yourself out of this situation. Here are 5 ways you can improve your credit score quickly by yourself:
1. Understand Your Credit Report
If you’re looking to improve your credit score, chances are you already pulled your credit report.
Your credit report includes all of your open and closed credit lines, defaults, and often assets like a home or automobile ( even if they are paid in full). Under federal law, you can get a free credit report once a year from the credit bureaus such as TransUnion, Experian, and Equifax.
Identify the reasons that lowered your credit score. Was it late payments, no credit history, or other discrepancies?
Go through your reports and check for any discrepancies. This can include information, such as falsely identified late payments or accounts that aren’t yours. In case you happen to find any erroneous information, you can easily dispute these items through the credit bureau’s website.
Your payment history plays an integral part in determining your credit score. If you have overdue accounts or missed payments, that will automatically lower your score, and unfortunately, this information stays in your credit report for 7 years.
But all is not lost just yet. Make an effort to pay off your bills within their due date. Even if they are overdue, try to pay them as soon as possible. Try to bring all accounts current and continue to pay them on time to improve your credit score.
2. Get Help From Your Creditors
If you are going through a financially difficult time, there is no shame in asking your creditors for some respite. They have an incentive to keep you as their customer, so the chances are that they’ll do all in their power to accommodate you.
After all, credit card companies fear that you might altogether forego the idea of paying your debt and file for bankruptcy instead. So, rest assured that they will be willing to negotiate the pay-back options as long as they retain your business and keep you from missing your payments.
Ask for your options, such as a lump-sum agreement or a hardship agreement.
In a lump-sum agreement, they will lower your debt drastically, on the condition that you pay it all in one payment. A hardship agreement will involve your creditor lowering your interest rate temporarily.
3. Get to 30% Credit Utilization
Credit bureaus look at how much you owe compared to how much credit you’re allowed.
Avoid maxing out your credit cards. Also, know your credit utilization rate – this is the debt you owe compared to how much credit you are allowed. Your total debt should be below 30% of your allowed credit.
If you have accrued debt on many accounts, prioritize a few of them. Once you are in the clear with at least some of your accounts, keep them open and use them sparingly to improve your credit history slowly. These will be counted as aged accounts with no debt.
4. Apply For A Credit Builder Loan
You do not need to have a good credit history (or any credit history!) to apply for our Credit Builder Loan that can not only be used to help pay off other debts but also to improve credit rating. Our Credit Builder Loans approve you based on your bank account deposit history. As long as you have consistent income – you could qualify!
You can qualify up to $1000 and will receive a portion of the funds the same day. The remaining portion of the funds from your Credit Builder Loan will be held in an interest-earning Credit Reserve account until you pay the loan in full.
Our Credit Builder Loan can fix your credit as you continue to make regular payments on it because we report your payments to all three credit bureaus. Many Credit Builder Plus members have improved their credit score by 60 points in 60 days!
Learn more about Credit Builder Loans here
5. Don’t Frivolously Apply For New Lines Of Credit
When you apply for a new credit line, the lender will generally examine your credit score report.
These inquiries can lower your credit scores. In fact, a hard pull can stay on your report for 2 years and affect your credit scores for up to a year. It is when a lender makes an inquest on your credit report when you apply for financing.
Simply monitor your credit score and wait till it goes back above to 700 or more before applying for a new line of credit. Even though inquiries don’t have a drastic effect on it, you still might want to avoid anything that can affect your credit report.
Correcting Your Credit Starts Today
Credit is a powerful tool that can help you achieve financial freedom, provide an emergency fund, and give you the means to purchase items over time. However, it is crucial to understand how to build it the right way to ensure that your credit history always serves you right.
But if you have made financial mistakes in the past, it is not the end of the world. It is still possible to fix the credit score all by yourself in as little as 60 days. The steps detailed above are simple yet powerful enough to get your credit score back on track and help you get loans at more favorable terms.
You can count on MoneyLion’s Credit Builder Loan to start repairing or building your credit score today!