Nobody can repair your credit for you with some statistical mumbo-jumbo. In fact, any company which promises to improve your credit score for you overnight is probably acting illegally or misleading you, as the only way to improve your credit score astronomically in a short period of time is to remove information from your report. If your credit score is poor even though your reports are accurate and updated, the best thing for you to do is start cultivating these healthy spending habits.
Good credit is, in part, the result of a lengthy credit history, and if you’re trying to build your credit, that can only happen through the careful cultivation of good spending practices over a period of years. Don’t expect your score to jump 100 points immediately after you’ve made a few on-time payments. Stay diligent and stay vigilant- know what you owe, when, and to whom, and keep track of the information in your credit reports and scores.
Pay on time.
If late payments are the biggest drag on your score, paying on-time and in full is a real boon to your score when you do it regularly. Instead of automatic payments, set up automatic reminders which alert you when you have to pay without sucking your account dry on the sly.
Step away from the credit card!
Before you purchase anything with a credit card, ask yourself a) if it’s a necessary purchase and b) if you would make the purchase in cash. In fact, the best way to avoid overcharging your credit account is to carry cash around in your wallet. Even if it’s not enough to pay every necessary expense, it will at least serve as a physical reminder of what you’re really using to pay your bills when you swipe your card.
In fact, put down the debit card too.
Repairing credit requires building credit, and the best way to do that is through responsible credit card use. Frequently using a debit card leaves your account vulnerable to fraud and identity theft which, if undetected and unreported, could have devastating effects on your credit and your financial future.
Keep your credit card balances low.
Keeping your credit card balances low in ratio to the amount of credit available in your account is a good indicator of responsible spending. Most credit scoring models look to this ratio, know as credit utilization, when processing and analyzing your financial history. Try and use only 30% or less of your available credit every pay period- any more than that may seem like an indicator that you’re in financial trouble and need quick access to a large amount of funds (which is exactly the opposite of what lenders want to see).
Have a good credit mix.
One of the best ways to boost your score once you’ve started to build it is by incorporating a healthy mix of credit such as revolving credit cards and installment loans (auto loans and mortgages). Consumers with a healthy mix of credit seem better able to handle different types of debt and, as such, more responsible to scoring models like FICO.
Of course, this method is only effective once you’ve incorporated the habits listed above- you can’t responsibly handle different types of debt if you’re not able to pay those debts off in the first place! It won’t boost your score overnight, in fact it might even lower your score initially, but the eventual payoff of a good credit mix can be anywhere between a 10 and 20 point boost to what should already be a pretty good credit score!
Take back control!
Ultimately, it’s up to you to improve your credit score and your life. If you behave responsibly, stay on top of your payments, regularly review your report information and credit score, and keep in mind that credit reporting and scoring are prone to human error (just like you!), you’ll be well on your way to a life of good credit, lower insurance rates, and better job security.
Bad credit goes away after seven to ten years, which may seem like a long time right now. But once you’ve cultivated the habits of a responsible consumer and incorporated them into your everyday life, you will be able to call yourself a responsible consumer and your credit score will reflect that. The journey ahead is long, yes, and sometimes hard, but it is far from impossible. And don’t forget, we here at Prime Credit Advisors are happy to help you on your journey to a healthier financial life.