You have just discovered that your credit score does not impress anyone, and you are suddenly blocked from achieving certain financial goals. It’s time to buckle up and get to work on a quick credit repair!
The good news is that a quick repair might not be as hard as you anticipate, although every step recommended below will take a good measure of financial discipline.
Here are several steps that you can take to repair your credit quickly:
Quick Disciplined Way for Credit Repair
Get a credit card if you don’t already have one. With a poor credit score, you might qualify only for a secured card, where you are given a line of credit equal to a deposit that you make. Don’t worry about that. People obtain such cards all of the time. Showing that you can use a credit card well will give a nice boost to your score. As you shop around, look for a card that will report your sound financial management of the card to all three credit bureaus.
Now that you have secured a card, add an installment loan to prove your credit-worthiness. This can be a personal loan, a car loan, a student loan or even a mortgage. It’s best to start small and work your way up. Go through a community bank where people know you, or your local credit union. Pick an amount to borrow that you know you can pay back without problems or temptation. Wrapping up that loan in a year or two will help to engineer a quick credit repair.
As you are responsibly handling new credit, do a little work on your old credit. Pay down your cards before you pay down other installment loans that you have. A recommended goal is to get your cards to 30% of your limit; 10% is even better if possible. Those are numbers that credit bureaus appreciate. For quick repair, many financial counselors advise people to pay down the card that is nearest to zero.
Use an old card for small charges that you can pay off immediately. If there is a credit card that you have forgotten about in your purse or wallet, get it back into the game by putting a small recurring charge on it that you can easily pay off each month. Older credit histories are more impressive, and if you don’t use that old card, the account might be shut down, which does not look good to a credit bureau. Dust off that old Visa and put your monthly car insurance bill on it, for example, to help with your credit repair.
Try to get a “goodwill adjustment.” These occur when you ask a lender to erase a late payment from your history. This type of request should be made in writing. If you have a decent history with the lender, you might be able to get this small erasure from your record. Every little bit helps, and it doesn’t hurt to ask.