Having a credit score below 720 can greatly affect many things in your life such as getting employment, a rental lease, a home mortgage, a home equity loan, an auto loan, a low interest rate, and you can even be denied some types of insurances. There are several steps you can take to raise your credit score. None of these steps are going to create dramatic increases, but over time they will raise your score. And even small increases can bring more money to your pocket in the long run.
The first thing you should do and quickest way to improve your credit score is obtain a copy of your credit report and review it for inaccuracies. The law does allow you to dispute inaccurate information and you can even request an investigation of any information in your credit file that might be inaccurate, incomplete and unverifiable. There is no charge for this investigation. In this process, if a credit bureau cannot verify information on your credit report within the time allowed, then by law it must be removed. If you do not have the time or do not understand how to make your case, look into hiring a credit repair company to learn about your options.
After checking for inaccuracies, I recommend paying more than the minimum due on each monthly balance. Your debt will decrease quicker and the interest charges will go down as well. Do not open any new accounts. Stop using a credit card if it has a high interest rate unless you are able to pay the bill in full every month, and if it is has a balance continue to pay on it monthly. In addition to you credit card bills, pay your other utility or tuition bills on time if not early.
To pull a score above 720, you need to focus on credit utilization which is how much debt you have compared to how much credit you have available. Most experts believe in keeping keeping your utilization below 30 percent. Therefore if you have a combined debt of $8,000 on a credit limit of $20,000 on multiple credit cards, your credit utilization is 40 percent.
If you brought that balance down to even $6000, you would be at an acceptable 30 percent and bringing it down to $5000 would bring you to 25 percent–even better. The bigger the drop in your utilization, the more your score will increase. It is not immediate as you must wait for the bank’s to post the new balances, but it will happen.
Another way to decrease your utilization is to increase your credit limit rather than reducing your debt. One thing to resist doing is cancelling the credit cards once they are paid off. You then lower your available credit which ultimately hurts your utilization rate.
It is my recommendation to monitor your credit for free each month to ensure that no inaccuracies arise and get help with credit repair if an inaccuracy arises. Pay your bills on time and every time. And pay close attention to your credit utilization. Try to reduce your the amount of debt you have compared to how much credit you have available.