The average American adult with a credit card has more than $5,200 in debt. As debt accumulates, it gets harder and harder to make payments. The longer this goes on, the lower a person’s credit score will drop.
When it comes time to buy a home or apply for a loan, this can be a major problem.
So what is a good credit score? Any credit score above 700 is considered “good.” Got a score above 800? That’s considered to be excellent.
But the average credit score is just 687, and a large portion of the population has a score that’s much lower. This can make it impossible to buy a car or house, or apply for loans for other purposes.
If you’re struggling with a low credit score, keep reading. We’re breaking down 5 tips that can help you improve your credit score fast.
1. Lower Your Credit Card Balances
Perhaps the most obvious answer to how to increase your credit score is to pay off your balances as quickly as possible.
If you have debt from multiple credit cards, focus on paying off the one with the highest interest rate first. Just be sure to still meet your minimum payment on all of your other cards to avoid incurring a late fee.
If you aren’t in a position to pay off your debt right away, or even to meet your minimum payments at this time, you do have other options.
One would be to transfer your debt to a credit card with a lower interest rate. This is a great way to give yourself a chance to start paying off your debt while incurring less additional debt in the process.
Before you start opening new credit cards and transferring your balances, do your research. Some cards charge a large fee to transfer a balance, and others will hit you with large interest fees once a certain period of time has passed.
If you’re struggling to pay off other debts besides just that from your credit cards, it’s a good idea to weigh your options to figure out which debts you need to tackle first.
Review your options for lowering your minimum payments on other debts as well as your current interest rates on credit cards and other debts to ensure that you’re paying off the highest rates first.
2. Never Miss Another Due Date
Whether you’re actively working to tackle your credit card debt fast or just making sure that you meet the minimum monthly payments, being on-time is a must.
After completely eliminating your credit card balances, never missing another deadline is the best advice you could follow when trying to improve your credit score fast.
Not only are late payments wasted money that you could be putting towards your credit card balances, but they can also harm your credit.
If you struggle to pay your bills on time, there are a few simple strategies you can try to help change your bad habit.
One idea is to set up automatic payments.
But this can still be a problem if you don’t remember that you have a bill due when the time comes to pay. You may forget to make sure that there is enough money in your account to pay that bill, and instead, get hit with an overdraft fee.
If you forget to adjust your monthly payment, you may also automatically pay more than you planned that month, which can leave you short-changed for other bills you need to pay.
Another option is to set up reminders on your phone or fill in a traditional calendar to remind you when your bills are due.
3. Avoid Closing Old Accounts
Several of the strategies on this list is designed to help you stop hurting your credit. This tip is designed to help you learn how to build credit instead.
It may seem logical to close out old credit card accounts that you aren’t using. But if you don’t have a strong credit history, this can be a mistake.
If you have an old account you haven’t used in a while, don’t close it. Instead, try to use it, even if its only for small amounts.
If you can use that account and pay it off, this can help improve your credit score. That’s because the older your account is, the greater impact it will have on your credit because it improves your credit age.
If you’re already struggling to pay off credit card debt from other accounts, the last thing you want to do is start building additional debt. So only use this tip if you’re confident that it won’t put you further into debt.
4. Stop Signing Up for New Credit Cards
When you’re checking out at a store or shopping online, it can be tempting to sign up for the latest credit card to enjoy a discount or a statement bonus. But unless you have an excellent credit history, resist the temptation.
That’s because applying for a new credit card means that the credit card company will be running a credit check on you. This will further harm your credit by at least 2 to 3 points.
If you’re already struggling with credit card debt, having yet another card can also tempt you into creating even more debt.
5. Lower Your Debt-to-Credit Ratio
The biggest influence on your credit score is your debt-to-credit ratio. This is the ratio between the amount of debt you have on all of your credit cards, compared to the amount of credit you have available on those cards.
Your goal should be to always have a debt-to-credit ratio of 30 or less. Paying off your debt can help lower your ratio.
Another option for lowering your debt-to-credit ratio is to seek professional help with your credit. Click here to learn more about getting help getting yourself out of debt.
Improve Your Credit Score Fast
When you’re trying to improve your credit score fast, these tips can help. Use them to tackle your debt and improve your credit card habits, and you’ll be on your way to boosting your credit score in no time!
But even with these strategies, if you don’t change the habits that got you into debt in the first place, your improved score won’t last for long.
Check out these 8 tips to start changing your spending habits and getting your financial life on track today!