December 23rd, 2018 7:21 AM by Jackie A. Graves
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You can ruin your credit score in just moments, but building it back upOpens a New Window. takes
much more time. It's no wonder so many of us find ourselves confused and
helpless when we diligently run our annual credit report only to discover our
scores are so much lower than we'd like.
In the long-run, you'll need to practice responsible borrowing behaviors if you
want to bring your score up and have a credit score lenders will love. Paying down debtOpens a New Window.,
making on-time payments, and keeping old cards open are all essential steps you
must take to get the best score possible.
But, if you don't have time to wait, there's salvation in these
four strategies to give your credit score a quick boost when trying to snag a
loan or sign a new lease.
One out of every five
credit reports likely has errors on it, according to the Federal Trade Commission
(FTC).Opens a New Window. Many
of these errors are big mistakes that made a notable impact on the credit
score. In fact, the FTC indicates 20% of consumers who spot an error have such
a big score increase after it's fixed that they move into a lower risk tier.
Moving into a lower risk tier means loan rates and terms are much better.
If you haven't checked your credit report lately, you may be one
of the millions with errors without even knowing it. Now's the time to find
out. Visit AnnualCreditReport.comOpens a New Window. and
request a free credit report from at least one of the three major credit
reporting agencies (Equifax, Experian, and TransUnion). You're entitled to one
report from each of these agencies each year.
Compare the report with
your own records, very carefully. If you spot mistakes, you can dispute them
online with EquifaxOpens a New Window., ExperianOpens a New Window., and TransUnionOpens a New Window..
You'll need to provide info about the error so the credit reporting agency can
investigate. The agency will reach out to the creditor reporting the disputed
information. If an error is discovered, the incorrect info will be removed from
your credit report -- and, hopefully, your score will go up.
The process of investigating a dispute typically takes around 30
days, so don't wait until you need a loan to try to get mistakes corrected. And
don't be afraid to point out any errors, or anything you suspect might be an
Credit utilization ratio is one of the most important factors
determining your credit score, with payment history being the only aspect that
carries more weight than this. Your utilization ratio equals credit currently
used divided by available credit. A $500 balance on a card with a $1,000 limit
means a 50% utilization ratio.
Paying down debt is one way to improve your utilization rate --
and it's the right way, because you also save on interest. But there's a
shortcut that may be available: increasing your credit limit. In other words,
if you can't reduce the numerator (debt), then increase the denominator
If your $1,000 limit became a $2,000 limit and your $500 balance
remained the same, your utilization ratio would fall to 25%. To get the most
favorable credit score, your ratio needs to be below 30% -- so this could make
a big difference.
Asking for a credit line
increase could result
in a hard inquiry on your credit report, which happens when lenders check your
credit if you apply for a new loan.
Unfortunately, too many inquiries can also hurt your score
because applying for too much credit is concerning to lenders. But, the good
news is, often you can get an increase without a hard inquiry. Just call your
credit issuer and ask. If you've been a good customer for a while and have paid
on time, they're very likely to say yes -- especially if your income has gone
Did you know one 30-day delinquency on your credit report -- for
paying a bill at least 30 days late -- could lower your credit score by as much
as 110 points if your score was otherwise excellent? Because payment history is
the most important factor in determining your credit, late payments have an
outsize impact. So having them removed from your record could boost your credit
If you legitimately made a late payment, don't try to dispute
it; you won't be successful. Instead, try contacting the creditor reporting the
delinquency and asking if they'd remove it as a gesture of goodwill. This type
of letter is often dubbed a "goodwill letter," and it's likely to be
successful if you're a good customer who usually pays on time but made one
mistake in the past.
When you write a goodwill letter, be specific about what info
you're asking the creditor to remove from your record. And you may want to
include a brief explanation for why the error happened. While this likely won't
work if you have multiple late payments or are currently delinquent, it can
work when you've mostly been a responsible borrower. It can't hurt to ask!
Do you have a parent or older relative with great credit who's
had a credit card that's been open forever? If so, you can ask if they'd be
willing to list you as an authorized signer on the card.
When you're listed as an authorized signer, the account is
usually reported on your credit report. This means you benefit from the
positive payment history and the account lengthens the average age of your
credit. Your own score should get a quick increase as you piggyback off of the
responsible borrowing behavior of your generous loved one.
While all these tricks can help you boost your credit quickly
and easily, ultimately the best solution for building credit is to practice
responsible borrowing. Avoid maxing out cards or taking out tons of new loans
at once, and pay your bills on time. If you do that, over time, you'll build a
credit score you can be proud of.
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