If you have a poor credit score, it’s important that you work on improving it because it could be holding you back. Credit scores are checked for just about everything these days. Lenders check them when you’re trying to get a loan and landlords check them when you are trying to rent a home, even some employers check your credit score when you apply for a job with them. Having a poor credit score means no loan, no home to rent, and no job. If you think your credit score is so low that there’s no hope for you to ever improve it, you’re wrong. You can improve it, and here are five ways to help you get started.
1. Check your credit report. You should always keep a close watch on your credit report because things can pop up on it all the time, and sometimes there are even errors on them. Pull your credit report from all three of the credit bureaus – Equifax, Experian, and TransUnion. You want to check all three because sometimes information may appear on one of them that aren’t on the other two. Look for any errors, like wrong names or addresses listed for you, collection accounts that don’t belong to you, closed accounts that are still showing as open, late payments showing that haven’t been late, etc. If you find errors, contact the credit bureau and let them know. If it’s an error in your name or addresses, they can fix it, and if it’s an error concerning a debt, they will investigate and if they can’t find proof that the debt is yours, they are required by law to remove it.
2. Pay off outstanding debts. It’s best if you pay down your credit card balances first because those have a big impact on your credit score. Pay off the cards that are closest to their limits first, but don’t close any credit accounts or your score will actually drop. Pay off the card, leave the account open, but don’t use the card again. Cut it up if you have to. Then start working on paying off other debts like student loans. When a debt shows paid in full, it looks good on your credit report and helps to improve your score.
3. Get a secured credit card. Secured credit cards are excellent tools for people with poor credit who want to improve their credit. With secured credit cards, you put down money on the card, usually it’s at least $200 that you have to put down, but whatever money you put down becomes your credit limit. So if you put $300 down on the card, then you have a $300 credit limit and you can use the card like you would a regular credit card. You make purchases with it and then pay off the balance monthly.
4. Make payments on time. One of the biggest things that can negatively impact your credit score is having late payments. The best way to make on-time payments is to set up automatic payments. That way you won’t ever forget to pay a bill when it’s due.
5. Talk with a credit counselor. Find a credit counselor to discuss your situation with. Many credit counselors can guide you in the direction you need to go to improve your credit score, and can help you learn how to not make the mistakes that got you that low credit score to begin with.