If you’re looking to buy a house or car, raising your credit score can dramatically improve the terms of the loan. With a higher credit score, you may be able to get a lower interest rate, which will allow you to put money toward other bills or help you set money aside for saving and investing.
Most creditors report to one of three credit bureaus: Experian, TransUnion or Equifax. All three bureaus issue credit reports and credit scores, so you’ll want to give them equal attention.
Ready to skyrocket your credit scores? Here are 3 steps that can instantly improve your credit scores across all 3 bureaus.
Step #1: Dispute All Errors
FACT: Creditors are NOT perfect nor do their reporting systems spit out error-free results. That’s why it’s so important to examine your credit report often to check for inaccuracies.
Annual Credit Report allows you to order your credit report once per year from each of the three bureaus for free. However, be careful not to order them all at once.
Instead, request your report once per quarter from each bureau. Quarterly checkups will give you a timely view of your credit and allow you to incrementally improve your score over the year.
What should you look for? Check for errors in missed payments and accounts that are too old to be listed. Then reach out to each credit bureau to dispute the errors.
Each credit bureau has 30 business days to respond, so it’s a good idea to make error disputing the first step in your journey to improve your credit.
Step #2: Pay Down Balances
Every credit bureau looks at several factors when they determine your credit score, and one of them is credit utilization. The bureau lowers your score if you use all the credit offered to you, and they’ll raise your score if you stay well below your credit limit.
To stay below, aim to use only one-third of your credit or less on each card. Here are three ways to achieve this:
- Transfer your debt. Sometimes your creditor will offer promotional rates on balance transfers. Take advantage of these special offers and transfer your higher balances to lower balance cards. Then continue to pay them down.
- Get a credit limit increase. Ask your creditors to increase your credit line. This method will work if you continue to stay well below the limit and don’t use the newly offered credit.
- Take out a personal loan. You may be able to get a better rate on a loan that will allow you to pay down each of your high-interest cards. Try taking a chunk from each card and adding it onto the loan. This method should help you improve your score by lowering your credit utilization.
Step #3: Pay Bills on Time
Always pay your bills on time. Your creditors may report missed and late payments after they are 30 days overdue, and then again at 60 days.
Don’t try to memorize when each bill is due, and don’t pay all your bills manually either. It’s easy to forget about a bill if you have to log in and set up several payments each month. It’s even harder if you’re trying to mail or hand-deliver housing or utility bill payments.
Set up automatic bill pay, which will free up your time so you can focus on earning, saving and investing instead.
Raising your credit score is not hard if you use the three techniques of disputing errors, paying down balances and paying your bills on time. If you do these three things, you’ll see your score dramatically increase over the next few months. Want more personal finance strategies? Schedule your complimentary personal credit consultation today