6 Tips for How to Improve a Bad Credit Score

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The average credit score in the U.S. rose throughout last year to a healthy 710. Minnesota had the highest average at 739 while Mississippi was the lowest at 675. These are all figures from a CNBC.com article.

But statistics aside, all that really matters is what your personal credit score is like, and if it’s bad, how you can improve it. Having a bad credit score limits your access to many things that could improve your life. If this applies to you, don’t worry!

In this guide, we’ll give you six tips on how to improve a bad credit score. If you follow this advice, you’re sure to get out of the cycles of hopelessness and resentment that you may be going through because of your low score.

Read on and learn how you can take control of your finances and flourish.

1. Start Dealing With Your Collections Accounts

One of the reasons many have bad credit scores is that they fall behind with payments and so end up having collections accounts. If this applies to you, the first step is to take ownership of your mistakes and start to pay off your debts in a responsible manner.

Contact the collection agency or agencies that you owe money to and ask if you can work out a new and realistic payment plan with them. If they agree, then pay off the amount you agree to pay every month on time.

You have to take ownership of what you did wrong in the past and put it right. It may seem tough at first to see large amounts of your income go to paying off these debts, but time will fly and all your efforts will pay off.

Soon enough, you’ll clear these debts and be in a fantastic new situation where you can develop a much stronger credit score.

2. Paying Bills on Time Is Important

Getting into the habit of paying off your credit card bills on time will make a major difference to your credit score in the long run. If you want to be in the good credit score range of between 670 to 750, then you need to develop this habit through discipline.

Any late credit late payments on your credit card can stain your credit report for years. If you do miss a payment, especially if it’s over 30 days, it should be an ultimate priority that you get it paid off.

You can also contact your creditor and ask if they can not report that missed payment to the credit bureaus, and promise you’ll pay all your bills on time in the future.

3. Request Higher Credit Limits

If you can get higher credit limits, it can do wonders for your credit score. The idea is you continue to use the same amount of credit that you always use so that when your limit is higher, your credit utilization is lower.

When you have a lower credit utilization it looks positive on your record, meaning your credit score may increase. If you do this with more than one credit card, this approach can have an even more positive effect, putting you in a better credit score range.

4. Consider Becoming an Authorized User

A rapid way to get into the good credit score range is to become an authorized user. You can ask a relative or friend with a good credit score to become an authorized user on their credit account to increase your credit score.

It increases your score because their good credit account will feature on your credit report, meaning your credit utilization increases You can do “credit piggybacking” as it’s called without being allowed access to the person’s credit account you are attached to, which can give the primary user (friend or relative) reassurances when helping you out.

5. Look for Errors in Your Credit Report

It may be the case that there are errors in your credit report that are dragging your credit score down. The only way you will know these is if you get into the habit of checking for errors in your credit report.

If you do find any apparent errors, you should dispute them right away. And if you’re wondering how to get credit reports, you can ask for them for free from any of the major credit bureaus.

For instance, one type of error might be that your credit report shows you made a late payment when this wasn’t the case. By disputing and fixing this error, your credit score will rise.

6. Use Secured Credit Cards

A secured credit card is one where you pay a security deposit to use the card. Often, the deposit amount is the same as your credit card limit.

These types of credit cards are handy if you don’t trust yourself to use a traditional credit card so wisely. Plus, they are easier to get than traditional credit cards due to the deposit aspect.

When you get a secured credit card, you can start building up your credit score by using the card during the month and then paying your bills on time.

One tip here is to find a secured credit card where the creditor reports your activity to all the major credit bureaus. This will enhance your chances of developing a credit score that you can be proud of.

Get Rid of Your Bad Credit Score for Good

All you need to do is develop good financial habits and follow a few strategies to get rid of your bad credit score for good. Paying your bills on time is crucial and try to look for opportunities to increase your credit utilization when possible.

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