Back in the day, nobody ever talked about credit report scores. They didn’t exist. You were either a good risk or a bad risk for a loan and your banker knew which one you were. Of course, like everything else, it’s gotten much more complicated since then. In fact, entire companies have been established for the sole purpose of judging your ability and likelihood of making payments in a timely fashion.
There are many people today whose credit score is much lower than they’d like it to be. This is due to a number of factors, including some that have been out of the person’s control. Many of them were doing fine financially until the recession struck in 2008, but then went into debt. Others, especially those with families, always tried to make the right financial decisions, but were repeatedly hurt by the decisions of a spouse who was not on the same page.
Just like getting out of debt, trying to raise a credit score can be very challenging. But there are a few steps people can take that will accomplish the task. It won’t happen quickly. This could be one of those two steps forward and one step back things, but the journey is worth it. Below I’ve listed a few steps you can start taking now:
- Ask a trusted friend or family member with excellent credit to add you as an authorized user on one of their credit card accounts. They don’t even need to give you an actual card if they don’t want to. Their credit account and related history will then show up on your credit report as if you held the card yourself.
- Get a secured credit card in your name. You need to make a deposit in the $200 to $300 range with a bank, which would be used if you don’t pay your bills, and the amount of credit that can be extended to you can’t exceed that But if you pay your secured credit card bills on time, your credit score will improve. Use it for an auto-pay bill so there is positive activity on the card each month.
- Keep your credit usage low. Even if you’re making your credit card payments on time, maxing out your cards will hurt your score. Try to keep your credit card debt at a maximum of 20 percent of your total available credit.
- Pay bills on time. Ideally, pay the full amount of your credit card bill each month. But if you can’t do that in some months, at least pay the minimum due – on time.
- Limit your celebrating. If you are successful in raising your credit score, pat yourself on the back. But don’t go overboard. You’re going to start receiving a bunch of credit card offers in the mail. Be selective and only get one or two of them unless you want to end up back where you were again. Remember, every time you apply for credit, your score will get dinged. And continue to make your payments for each card on time.
Are there other ways you’ve tried to raise your credit score? Have they been successful? Our readers would love to hear about them.