Five Ways to Improve Your Credit On Your Own

Building and maintaining a strong credit score is especially important because it allows an individual to have more financial freedom. Because credit helps businesses determine your likelihood of paying back a loan, having good or poor credit affects where you can live, what you can drive, what your payments and interest rates will be, what loans you can be approved for, etc. Fixing your credit is a process, but it can be done on your own without having to pay an outside source to do it for you.

1. Regularly reviewing a credit report

Regularly reviewing a credit report will help you stay focused on repairing your credit score faster. You can receive three free credit reports each year from the reporting agencies: TransUnion, Equifax and Experian. You can do this online at AnnualCreditReport.com, or by calling at 1-877-322-8228.

You can also create an account through Credit Karma for free at creditkarma.com. They offer a downloadable app that shows you an idea of your current score and will help you monitor your credit.

2. Pay down ALL debt

Owing too much money does a lot of damage to your credit. Write a strict budget and strive to use only the funds you have available when making your monthly payments. It will also be beneficial to pay cash for necessities like groceries.

Use the remainder of your funds to throw at any major credit card balances, medical bills or other loans. Creditors and lenders usually report to a bureau once every 30 days, so you should expect to wait up to a month before there is any change in your credit score.

3. Dispute errors

Take some time to thoroughly review your credit reports and check for any misreported or incorrect information. Disputing any significant errors from your credit history can quickly boost your score. You can dispute these by contacting the creditor online or over the phone to confirm the error. Once you’ve finished the disputing process, you’ll need to allow some time (usually up to 35 days) for the claims to be investigated before they’ll be removed from your credit history.

4. Pay everything on time

Going forward it will be crucial to pay every single payment on time if you want to see any kind of betterment to your score. A single skipped payment can knock up to 100 points from your score. Create reminders in your phone or paper calendar to remind yourself when each payment needs to be made by. Even doing this for just 6 months will greatly increase your score.

5. Don’t apply for new credit cards

Not only is applying for new lines of credit an especially slippery slope when your credit is already suffering, but it will also increase the temptation to use them. Resisting the urge to sign up for new cards will highly benefit your score in the long run. It will also be important to cancel any unnecessary credit cards once the balances are paid off and only keep your highest-limit credit cards open. Once all debt is gone, light use on your highest-limit credit cards can also help boost your score if the payments are made in full immediately after use.

Once your credit score improves it will vastly broaden your financial options and opportunities. Establishing better credit will take some time, but it will ultimately be worth the effort!