Just like physical health, there's no fast lane to an excellent credit score. It's a long-term journey. But just as you can start making healthy diet and exercise choices today, you can do the same for your credit.
Here are a few things you can try right now to help boost your credit health.
Task: Ask for a higher credit limit.
Possible benefit: Could lower your credit card utilization.
Approximate Time: 10 minutes
Tactic: Most credit card companies periodically review credit limits, but if it's been a while since you've received a credit limit increase and you have an excellent record, you could try requesting one. Calling up your credit card company might seem like a daunting task, but if it could help your credit health, why not give it a shot?
First, find your creditor's phone number on your latest statement, on the back of your card or by searching online. Explain to the customer service representative your reasons for requesting an increase. You'll likely need to provide additional personal information, like your income and employment status, to start the application process. If a phone conversation feels too intimidating, check if you may be able to request an increase through your online account or by visiting your local branch.
Watch out for: Sometimes, credit limit increase requests can come with a new hard inquiry of your credit report, which could initially have a negative impact your score. Make sure to ask first if this will happen so that you know what to expect and can decide if you'd still like to go through with your request.
Task: Write a "goodwill adjustment letter" for a past late payment.
Possible benefit: May remove a late payment from an otherwise good-looking credit report.
Approximate Time: 15 minutes
Tactic: If you've recently made a late bill payment when you're ordinarily on top of things, you could try asking to have that one black mark removed. In your letter, make a case for why the delinquency should be removed. Generally, you should describe briefly what happened, show what a loyal customer you've been and point to your positive track record before and after the misstep. You could model your letter after this example (make sure to personalize!) and wait about 30 days before following up, if you haven't heard anything.
Watch out for: Remember that your credit card company or lender doesn't have to remove the delinquency, so be prepared to wait until it eventually falls off of your report.
Task: Make a plan to pay down your credit card debt at a faster rate.
Possible benefit: Could lower your credit card utilization and reduce interest fees.
Approximate Time: 30 minutes to an hour to plan
Tactic: If you tend to carry balances on your credit cards from month to month, consider working out a plan to pay down your debts faster so you can get your credit card utilization rate to lower than 30 percent (the rate that credit experts generally recommend you stay under).
You can easily check your credit card utilization rate on Credit Karma to see where you stand. Work on the cards reporting more than 30 percent first. If you've only been making the minimum payments on those cards and are able to afford it, it's a good idea to increase your payment amounts so you can steadily decrease your utilization rate. If you can pay your whole bill amount, then you can avoid interest charges as well. You can track your spending habits by connecting your online accounts through Credit Karma.
Watch out for: While you're working on lowering your balances, try not to rely too heavily on your credit cards if possible. Otherwise, you could end up reversing all of your hard repayment work with new spending.
Task: Transfer your credit card balances.
Possible benefit: May strengthen your debt pay-off plan and increase your total number of accounts.
Approximate Time: 15 minutes to apply (then 7 to 10 days if approved, typically)
Tactic: When you have lots of different credit cards with varying balances to pay off, making multiple payments each month can seem tricky. There are several cards that offer introductory balance transfer rates, meaning if you transfer all or some of your other cards' balances, you'll pay little or no interest on those transferred balances for an introductory period (often a year or two). These promotions vary by card and usually come with a one-time fee, so always review the terms carefully. If you're interested in opening a balance transfer card, you could start by reading member reviews on Credit Karma.
Watch out for: In most cases, if you don't pay off your balance transfer completely during the introductory period, you'll have to pay interest on the entire transferred amount when that period is up. So this tactic is generally good for you only if you're really ready to pay off your credit card debt during the introductory period.
Task: Dispute credit report errors.
Possible benefit: Should result in a more accurate record of your credit history.
Approximate Time: 1 hour to prepare a dispute request (then usually up to 30 days)
Tactic: While some credit report errors don't affect your credit score at all (like inaccuracies in your personal information), others could severely impact your ability to get approved for credit (like inaccurately reported derogatory marks). Cleaning up errors from your credit report should be a top priority. Check out this step-by-step guide to help you through the process of addressing inaccuracies in your reports.
Watch out for: While some credit repair companies will tell you they can remove all negative information from your credit report through this process, that's often not the case. Accurate negative items on your report cannot typically be removed. Before you hire a company to help you dispute your credit report errors, read through these resources from the Consumer Financial Protection Bureau and the Federal Trade Commission.
In a world of instant gratification, it's natural to want a better credit score right now. Unfortunately, that's not how credit scores work. Your scores depict an overall picture of your financial health and habits, and it takes time to prove your discipline. Stay patient, and you may move up the credit ladder over time.
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