Whether you’re getting a mortgage, applying for a loan, or buying a car, most significant life changes require decent credit. It’s common to make mistakes that lower your credit score, especially when you’re young, but these mistakes are repairable. Even if you have terrible credit today, that doesn’t mean you’re doomed forever. It just means you need to get a handle on your credit now so you can raise your score over time and build a bright financial future for yourself.
Determine Why Your Credit Score is Low
The best way to successfully raise your credit score is first to figure out what exactly is making your score so low. To do this, you’re going to need a copy of your credit report. It makes a big difference to get your credit score from all three credit bureaus—TransUnion, Equifax, and Experian. Everyone is entitled to one free credit report every twelve months AnnualCreditReport.com. If you’d like to check your scores every month, there are also paid services like myFico.
Dispute Any Errors You Find
Finding errors on your credit report can be scary and frustrating, but it’s actually quite common. If you notice any debt on your credit report or any other types of errors, you’ll need to dispute them as soon as possible. To do this, you have to tell the credit company in writing what the mistake was and prove it with documentation. Make sure to include any item you dispute on your credit report in the letter and request that they remove it. Typically the credit bureau will investigate the dispute within 30 days and then send you a free updated credit report once they’ve made changes.
Get a Credit Card—But Don’t Use It
To boost your credit score, get a credit card or a retail store card. If your score is too low or non-existent to get a credit card, try a secured card instead. With a secured card, you use your own money as collateral by putting down a deposit. When you have a credit card, try not to use it that often. Just having it will prove that you’re using credit, but keeping the balance as low as possible or completely nonexistent will keep your credit utilization rate low. This will improve your credit score much more quickly than any other method as long as you’re not making any late payments on your new card.
Pay Bills on Time
And speaking of late payments, make sure that you don’t have any. Every late payment will show up on your credit report as a black mark against you. Your payment history makes up 35 percent of your FICO score, so don’t pay delay or skip any payments. If you honestly forget to pay some bills each month, set up automated payments so you can be sure everything is getting paid right on time and your balance is staying nice and low.
Good credit is any score above 700; bad credit is anything below 600. If your credit score is hovering around bad, try out these handy methods to raise that number. Only use your credit cards to make minimal purchases each month, pay all of your bills on time, and closely monitor your credit score so you can report any inaccuracies along the way. Being vigilant is essential, and as long as you’re using your credit responsibly, that care and attention will show up in your credit score over time.