All too often, low credit scores keep individuals from obtaining loans, credit cards, and other forms of financing. Over a long enough period of time, there are ways for individuals of all incomes and debt levels to repair their credit and get back on their feet.
1. Obtaining a credit card is perhaps the simplest way to develop a good credit score, as it establishes reliability and creditworthiness in the eyes of the credit bureaus. Although you do not need to carry a balance in order to have a good score, using a credit card or two and paying off the balances on time can help you gradually boost your credit score. For individuals who do not qualify for a credit card, many banks offer secured credit cards, which contain a balance equal to the deposit made.
2. Another relatively simple way to improve your credit score is to pay off existing credit card balance. For a large number of people, credit card debt represents the primary factor in a low credit score. To repair a damaged credit score, you should start by repaying all credit cards and other revolving accounts. In general, credit bureaus grant higher scores when they see a large difference between available credit limits and the amount of credit actually used.
If you have more than one card, paying off the one with the lower balance first will allow you to put that money towards the payment on the higher balance card.
Check your interest rates and focus your attention on the card with the highest interest rate.
Call the card issuer and negotiate a lower rate based on the length of time you’ve been a customer and your solid payment history.
3. Whether or not you pay your credit card bills in full every month, charging a large percentage of your card’s credit limit represents a red flag for credit bureaus. As such, you can increase your credit score by limiting purchases to 30 percent of a card’s maximum limit. Many credit card companies offer text or email alerts at user-specified amounts, which can help you keep track of your monthly spending.