Looking to fix your credit fast in the new year? This sponsored post from Credit Sesame offers some insights into the steps you can take to make it happen.
Your credit score is a financial calling card that tells lenders a lot about you.
A good credit score shows that you’re financially responsible. A low score paints a very different picture.
Turning a poor credit score around means shifting your financial habits and that can take time. Is it possible to boost a low score in just three months? The answer is yes — if you have the right plan.
1. Check Your Credit Report and Score
Knowledge is power when it comes to fixing your credit. If you don’t know what’s in your credit report, it’s a lot harder to get a handle on improving it.
You can get your free credit score and TransUnion credit report through Credit Sesame. When you join, you also get access to a credit dashboard that can give you some insight into what might be hurting your credit score. Once you have this information, you can take the next steps to fix your credit fast.
Look for errors or discrepancies in your report. These can drag your score down in a big way. If you find an error, you can dispute it online with the bureau that’s reporting it. If the credit bureau finds that you’re right about the mistake, they’ll have to correct or remove it, which could add points back to your score.
2. Get Your Credit Card Balances Under Control
Credit utilization — or how much of your available credit you’re using — has a big impact on your score. Maxing out your credit cards can keep you from taking your credit rating to the next level.
Look at what you owe on your cards in relation to your credit limits. For good credit, you should be aiming to use 30% or less of your limit at any given time. If you want to give your score an even bigger bump, try getting that figure closer to 10%.
If you can’t pay a big chunk of your credit card debt off at once, there’s a backdoor way to potentially improve your credit score: requesting a credit limit increase. Raising your limit can improve your utilization ratio. Just remember that this method works best when you don’t add to your card’s balance.
3. Consider Paying Off Collection Accounts
When a debt goes unpaid long enough it can land in collections. Unpaid collections can significantly ding your score and they can stay on your credit report for up to seven years.
There is some good news, however. Both FICO and VantageScore, the two major credit scoring models, have been updated to ignore paid collection accounts in your score calculation. If you’ve got some lingering collection accounts, paying them off could raise your score. In some cases, the collection agency may delete the account from your credit file altogether once it’s paid off.
Review Your Credit Regularly
Remember to track the progress you’re making towards a better score. With Credit Sesame, you can get your updated score monthly, along with alerts anytime your score changes. Seeing quick improvement can be a big motivator to continue with your credit-boosting efforts.
This is a sponsored post from Credit Sesame.