If your score is low, and you are looking to buy a house, start a business, or take out a loan for any other reason, you might be looking for the fastest possible way to increase your score. The quickest way to improve credit is with the help of a trained financial advisor – at Credit Fix, our professionals are trained to understand the system, and expedite the process of improving poor credit.
In general, these are the steps you can take to recover a low credit score quickly.
Get a Secured Credit Card
A secured credit card is backed with a cash deposit – a ‘security deposit’. Usually, the credit card limit is equal to that same deposit (although this is not always the case). It is typically easier to be approved for a secured card, since the deposit mitigates the risk for the lender. Getting a card and making timely payments (and never maxing out your credit limit) is the most important step towards healing a poor credit score.
When choosing a card issuer, it is important to pick a card that reports to the credit bureaus. Many prepaid credit cards (which in actual fact work more like debit cards, but are often confused with secured credit cards) will not send your account history to credit organisations, and therefore they will have no impact on your credit score.
Act Strategically When Using Credit Cards.
The percentage of your credit card limit that you actually use is called your credit utilization. If, for example, your credit card limit is $10,000, and you use $5,000 in a month, your credit utilization is 50%. People with highest credit scores typically use less than 10%. If you are trying to rapidly boost your credit score, you should aim to minimise your credit utilisation (although it is important to use credit cards, so you have the opportunity to pay your bills on time).
The aim of the game here is to make sure your credit utilization is low at the time that the credit card company reports it to the credit bureaus. Since it can sometimes be tricky to know when this will be, the best option is to pay back your credit in a few installments each month, and never let your credit utilization exceed 10-15%.
Another way to tighten your credit utilisation is to request a higher limit on your card. If your balance remains constant, but your credit limit goes up, your credit utilisation will be instantly lowered.
After timely payment of bills, credit utilisation is the most important factor in calculating credit scores. You should keep track of your credit utilisation. At Credit fix, we can help you track your credit card utilization, and recommend ways to lower it.
Dispute Errors in your Credit Report
Sometimes, a person’s score may be low due to errors made by card issuers or other lenders. You are entitled to a credit report upon request at Equifax or Transunion, so it is a good idea to use that right and see your report for yourself. If you find mistakes, such as payments marked late even though you paid on time, you should dispute these errors. At Credit Fix, we can help you access your reports, and file complaints about credit errors, with no headache on your part.
Diversify your Credit Mix
Credit scores are calculated partially by the amount of timely payments you make. As such, having more bills to pay may help increase your credit score. It might be a good idea to open an additional credit account (if you can afford it), or even take out a low-cost credit builder loan. Getting a new credit card may even help keep your credit utilization down across your other cards. At Credit Fix, our financial advisors will help you examine your credit mix and help advise on the most appropriate steps to take to help you reach your goals.