This is a guest post.
There is no silver bullet for fixing bad credit scores.
A credit score that has been damaged by frequent nonpayment and late payment of debt may take time and multiple approaches before it assumes financial health.
Credit scores below 500 are considered bad and need some repair, while those at 720 or up are considered excellent and need only maintenance work.
If a credit score is below excellent, the debtor has some borrowing and repayment practices to modify or abandon, but those with the worst credit scores need more urgent action than the rest.
Here are 5 ways to increase credit scores:
1. Get a copy of your credit score and credit report and examine them carefully
Credit score repair begins with knowing what needs repair. When you get a copy, check reports for data errors, as well as payments incorrectly listed as late. Also, verify the amounts owed for each open account. Once any disparity arises, discuss it right away with the credit reporting agencies.
2. Avoid maxing out credit cards
If frequent credit card use cannot be avoided, the wise move is to get another card to spread out the credit lines. If you have multiple credit cards, pay those nearing their limits first. A credit card balance of 10-30 percent of the credit limit is desirable.
3. Pay bills on time
If there is one key approach to increasing credit scores, it is paying bills on time. If your financial situation hinders you from making payments, call your creditors and negotiate. Your goal is to keep your accounts current and away from being labeled as delinquent. You can negotiate for reduced monthly payments or different pay dates that will not conflict with your other bills.
4. Start with a small loan before borrowing a bigger loan
Securing financing for valued items is a quick means to start raising credit scores. Be reminded, however, that unpaid loan can sink your credit score even lower. So, start with a loan you can responsibly handle before attempting to borrow a bigger loan.
5. Leave accounts with balances open
If you have delinquent credit card accounts, keep them open and make them a priority in your payment scheme. Closing them will do more harm than good. Closing accounts shorten credit history and reduce creditworthiness, making credit scores drop.
These are just five suggestions to improving credit scores. Remember that reaching a healthy credit standing is not a quick fix, but requires managing credit responsibly over time.
Mickey writes for America’s debt help Organization, which provides content about a range of topics, including reducing debt, finding student loans, maneuvering through real estate transactions and planning for retirement.