When it comes to credit, most consumers fall into one of two categories. They either have a firm handle on how credit works and what actions effect it or they are completely clueless. Regardless of which camp you fall into, you may be looking for ways to boost your credit score in a relatively short time.
There are many reasons you may want to increase your score. Maybe you’re looking to buy a house or a car and you want a lower rate or maybe you want to call your credit card companies and ask for a rate reduction on existing debt. No matter what your reasoning is, having good credit is always beneficial. Read on to discover 5 tips for fixing or boosting your credit score.
1. Pay bills before the statement date
Typically, creditors report the balance as of your last statement date to the bureaus. By paying just a little bit early, you can lower the amount that’s reported. that lowers your utilization rate and increases your credit score. How much you owe is 30% of your overall score, so make sure you pay those bills in advance of the due date for the biggest impact.
Keep in mind that not all cards are the same. Some don’t use the balance on your statement date, but rather choose another arbitrary date during the period for reporting purposes. If you’re feeling bold, call your creditor and ask when the balance gets reported, then plan to pay in advance of that date.
2. Make multiple payments
Another artificial way to lower the balance that is reported is to make multiple payments throughout the month. If you’re one of the people that use your credit card for everyday expenses, you should try to pay it off on a weekly or biweekly schedule to make sure that you don’t have an entire months worth of use being reported.
This artificially lowers your utilization rate, which will lead to a higher credit score. In reality you’re still spending the same amount and you’re still making the same payments, but it just looks better to creditors. Be warned that if you take advantage of this opportunity, your credit card company may catch on and put limits on the number of payments you can make each month.
3. Ask for negative marks to be removed
If you only have one or two negative marks on your credit report you may be able to get them removed by simply calling the creditor and asking to have it taken off. You may also have an incorrect report that you need corrected, which is just a simple (and polite) phone call away.
You’d be surprised how many times creditors will agree to do this if you’re an otherwise good customers. If you’re always late with your payments this won’t work, so only bother attempting it if you have one or two late payments and a good reason why.
4. Pay to have negative remarks removed
If you have accounts that have been taken to a collector, you can sometimes negotiate with the collector to remove negative remarks in return for paying the debt. You will be shocked to know how many companies are willing to agree to this condition just to get the money.
Before you make any agreements or pay the bill, make sure you get the reward in writing stating that they will remove the debt from all three major credit reporting agencies. This method of repairing your credit score is sometimes called pay for deletion because you’re paying a debt to remove the remarks.
5. Protect yourself during a short sale
A short sale is when you sell your home for less than what you owe on the mortgage and the bank eats the difference. This type of sale usually has a very negative impact on your credit because the bank reports the debt as “settled for less than the full amount”. That remark can knock hundreds of points off your score, so try negotiating for a more neutral, “paid as agreed”.
The best time to negotiate for this change in verbiage is before or during the short-sale takes place. Once the short sale is complete you’re no longer the banks customer and they have no incentive to negotiate with you.
These 5 tips can help you fix or enhance your credit score to straighten out previous credit pitfalls or boost your score for a planned purchase. Take advantage of any tips that apply to your situation and watch your credit soar.