Financial struggles have hurt a lot of people’s credit history and dropped their credit scores farther than they are comfortable with. Rebuilding your credit score will take time and dedication, but it can be accomplished by taking some specific actions aimed at increasing your score. Here are a few ways that you can use to start repairing your credit score.
Pay All Of Your Bills On Time
The damage to your credit score can never be repaired if negative information is continuously being added to your credit history. Your payment history is the largest percentage of your credit score, so it must be perfect if you want to rebuild your credit. Make sure that you are paying all of your bills on or before the due date and, if you can, set up auto-pay for each credit card so you do not accidentally miss a payment. If you are living paycheck to paycheck, sit down with your budget and find places where you can cut corners so that every bill is paid.
Pay Down Revolving Debt
Revolving debt, like credit cards, has a higher impact on your credit score than installment debt, like a car loan or a home mortgage. If your credit card balances are close to the credit limit, it can drop your credit score by a significant amount. Paying down your revolving debt will result in an immediate improvement in your credit score and help you qualify for lower interest rates for any credit products you apply for in the future.
Fix Any Mistakes On Your Credit Report
You should check your credit report regularly to make sure there are no mistakes or identity theft-related issues in your credit history. It has been estimated that nearly 25% of credit reports have at least one significant error that can result in a decrease in the person’s credit score. Many mistakes can be fixed quickly and easily if they are caught soon after the mistake was reported. Depending on the nature of the mistake fixed, it can raise your credit score more than any other action taken to rebuild your credit score.
Keep Older Credit Accounts Open
Although it may seem like good common sense to close out old credit accounts that you are not using, closing out your older accounts can actually hurt your credit score. One of the main factors of your credit score is your “credit utilization ratio,” which measures your credit limit-to-balance ratio on your credit cards. Keep these accounts open and take the credit cards out of your wallet, placing them in a secure location where the information can be protected.