You’ve worked hard on your credit, and then you notice one day it took a big hit — seemingly overnight. Don’t stress. You can improve your credit score in three months. While three months might seem like a long time, credit is an intricate system that has a process.
Improving your credit score quickly
Your credit score is one of the most critical factors that will affect your financial future for years to come. While it can be easy to forget about or overlook sometimes, your credit score can drop if you make a poor financial decision. With a poor credit score, you might have trouble securing a loan, renting an apartment, getting a car, or landing a job.
The good news is that you aren’t doomed to a low credit score for the rest of your life. You can take several steps to repair your credit score quickly and get on the road to recovery. Here’s a breakdown of how you can improve your credit score in three months.
Disputing errors on your credit report
Everybody makes mistakes, and credit bureaus are no different. It’s important to check your credit report regularly to look for any inaccuracies that could negatively impact your score.
There might be reports of late payments that were actually on time, accounts that don’t belong to you, or other misinformation. Federal law gives you the right to an accurate credit report, so credit bureaus must fix the errors immediately.
You can obtain your report and dispute any errors by contacting any of the three major credit bureaus, including Equifax Inc., Experian, and TransUnion. Make sure you only dispute true inaccuracies on your credit report and never dispute any correct information just because you want it removed.
Improve your credit score with the help of the experts
A credit repair company can help you improve your credit score. You can also do the same thing at no cost. Still, credit repair companies can take the added stress and responsibility of managing creditors and the credit bureaus off your shoulders. They can remove unknowns from your credit report and get you on payment plans. It is important to ensure you are dealing with a reputable credit repair company, as many scammers are out there. Do your research and if something seems off, trust your instinct and ask questions.
Track your finances
It can be much harder to improve your finances if you don’t know where you stand. Tracking your spending and budgeting habits will give you a clear picture of where your money is going and how you can cut back on expenses to pay down debts faster and improve your credit score. Tracking your finances could be as simple as consistently reviewing your account statement and getting rid of services you pay for every month without using or creating a spreadsheet of your expenses. Find what works best for you when it comes to tracking where your money is going.
Pay down debt
Your credit utilization rate represents how much of your available credit line you are using. It’s calculated by dividing your total debts by your total available credit. The rule of thumb is that your credit utilization rate should be at or below 30%. Still, your goal should be around 10% utilization.
Paying down debt will lower your credit utilization rate and improve your credit score. If you’re not able to eliminate all of your debt, at least try to make more than the required minimum payments each month. There are different methods of paying down debt that people find successful such as the snowball method, where you pay down smaller debt first and then carry those payments over to other debts.
Making more than your minimum payments will help you knock out debt faster, boost your credit score, and lower the amount you pay in interest overall. Less interest paid means more money in your pocket!
Avoid overusing credit cards
Your credit cards can seem tempting, especially to use for that unexpected purchase when you’re low on funds. Do your best to use your credit cards sparingly. This will help you avoid debt and save on expensive interest rates.
While this type of credit can raise your score if used responsibly, credit cards also have one of the highest interest rates, so it’s a good idea to avoid making large purchases with them. Also, if you can’t pay off your card immediately, try to avoid using it.
Only apply for loans when necessary
Refrain from opening new credit accounts or applying for loans when you’re working to raise your credit score. Every time you apply for a line of credit, lenders pull your credit score via a hard credit check, lowering your score by a few points every time. So you should only apply for loans when you are serious about making a purchase or opening a new account to avoid hard credit pulls.
Don’t miss a payment
Missing a payment usually isn’t an intentional thing. People forget, lose track of time, or life happens. But payment history accounts for 35% of your credit score, and it can be a costly mistake. Staying on track of your payments is a great way to improve your credit score. Set reminders in your calendar, sign up for autopay, or whatever system works for you to make sure you don’t miss a payment.
How to Get a Credit Boost
Figuring out how to raise your credit score fast can seem intimidating, but it’s not that hard. With focus and a clear goal, you can get your credit score up in three months with a few tips. Pay down debt, make your payments on time, avoid hard credit checks, and stay on top of your credit report. After some time and diligence, you will see a boost in your credit in no time.
What bills help build credit score?
Bills that can affect your credit score include rent payments, utility bills, cable, internet bills, phone bills, insurance payments, car payments, mortgage payments, student loans, credit card payments, and medical bills.
How fast can I rebuild my credit score?
You can rebuild your credit score fast by paying off debt to lower your credit utilization, pay your bills on time, and dispute any incorrect charges.
Does financing a car build credit?
As long as you pay on time, financing a car can build your credit. Keep in mind, it could take 60 to 120 days from opening before you see a significant boost.