There are thousands of people that have credit issues and, according to August Funding, many of them aren’t really sure how to improve their scores. They might feel hopeless or like they’re stuck, but there is some hope. If you’re one of these people who are trying to find a way to have a better life, then keep reading and see 12 things you can do to help improve your credit.
1. Get Updated Copies of Your Credit Report
The first thing you want to do is get updated copies of your credit report. Not only will this help you see what’s on your report, but it will also give you a place to start. To figure out which debts to deal with first, you want to look at the amounts owed and the dates they were opened. It’s usually a good idea to pay off bigger balances and newer accounts first, then take care of the lower balances and older accounts.
2. Look for Errors on Your Credit Report
After getting copies of your credit report, you want to make sure there aren’t any errors. This could be anything from wrong dates to payments that you made being marked past due. You also want to make sure there aren’t any lines of credit missing. It might not seem like a big deal, but not having them documented on your report could actually hurt you in the long run.
3. Make Sure There isn’t Fraudulent Activity
It doesn’t happen very often, but some people can have bad credit scores because they were a victim of fraudulent activity. In fact, August Funding noted that many people don’t even realize they had this happen. The main thing you’ll want to look for is lines of credit that you didn’t open. Having multiple of these could point to identity theft, which really isn’t good. Not only do you want to look at the dates credit was opened, but you also want to look at what the line of credit actually is. For example, if you know you have 3 credit cards, but your credit report has 6 of them, then there’s a good chance someone used your information to open 3 more credit cards!
4. Start Taking Care of Your Past Accounts
Once you look over your credit report and make sure everything is correct, you’ll want to go ahead and start taking care of past accounts. For starters, you want to make sure you bring all your lines of credit current. This means paying off any balances on them. You’ll also want to try and completely pay off what you can. For example, if you have a loan that is past due but doesn’t have a huge balance, you can make a concerted effort to pay it off. It will be taken off your account and increase your score.
5. Bring High Balances Below Your Report Limit
Every person has a certain limit when it comes to their credit. If they’re below this limit, then they are alright. If they are above this limit, then their score starts taking a hit. The best thing you can do is find out what your limit is and look at any accounts you have above that limit. Try and make the balance of these accounts go below the limit so you can increase your score.
6. Avoid Getting New Credit
You also want to make sure you avoid getting new credit. This is the last thing you want to do if you’re already struggling to take care of the accounts you already have. It will just be another payment you’ll have to make. If at all possible, try and take care of any new expenses with cash or your debit card. This will make it so you won’t have another account on your credit report and you’ll be able to take care of what really matters.
7. Keep all Credit in Good Standing
For the accounts that you were able to get current, make sure you keep them in good standing. While you want to devote your attention to the past accounts you’re paying off, you don’t want to neglect the current accounts you have. You want to make sure you are paying the amount due on or before the due date. This will help ensure that you won’t have any new negative marks on your account and it can help show that you’re being responsible, which can help increase your score.
8. Try to Become an Authorized User
Another thing you can do is become an authorized user on someone else’s line of credit. You want to make sure this person has good credit and makes all their payments on time. You can spend a small amount, like $25, and just give them the money. As long as you keep doing this, and they keep paying, your credit score will start going up a little bit.
9. Build an Emergency Fund
According to August Funding, building an emergency fund can really help you out. Not only will you be ready for when something happens, but you won’t have to make your credit balances higher as a result of any unforeseen situations. All you have to do is take out what you can from each paycheck and put it into a savings account. It might take some time to build the desired amount, but once you do, you’ll have it on hand to use. Even if it isn’t enough to cover the entire amount of the emergency, you’ll be able to use the money for a portion of it at least. Just remember, you want to try and not use it for something that isn’t an emergency because you’ll just be back at square one.
10. Reduce Expenses Whenever You Can
You can also try and reduce whatever expenses you can. The easiest way to do this is by looking at what you pay every month and see if there’s anything you can get rid of. For example, if you have cable and multiple streaming services, then you can get rid of at least 1 of them. You could also get rid of anything that you don’t use, such as magazine subscriptions or home phone. You want to make sure you have as little money being spent as possible so that you can make all your payments on time.
11. Don’t Close Unused Credit
You also want to make sure you avoid closing unused credit. The 2 main reasons why you shouldn’t close a credit card you don’t use anymore are: it can hurt your credit score, and it won’t help show that you have a lengthy credit history. The best thing you can do is just leave the card alone. As long as you make a small purchase every few months, the account will remain in good standing, and your account history will become a benefit.
12. Try Setting Up Reminders for Bills and Payments
Finally, you can try setting up reminders for bills and payments. This is especially helpful for those that aren’t very good at remembering when things are due. You could set up as many reminders as you want, but you want to have at least a reminder for the day your bills come out and a reminder for the day your bills need to be paid. You could also set one that lets you know that your bill will need to be paid in a week or however many days you want as a way to be sure you have enough money set aside in advance.
While it might take some time and you’ll have to be patient, doing these things can help you get out of bad credit. If you are still struggling, it might be a good idea to consult a professional and get expert help!