The season to be jolly is fast approaching, but, you have cause to worry. It may not be as jolly as you wish it to be because your credit score has been a train wreck for the last couple of months.
Despite several efforts to get it back on track, it seems impossible to move it by a point!
Perhaps you wanted to take a mortgage as a gift for your partner this Christmas. Or maybe you just wanted to cash in the various offers and card benefits. But your credit score just wonâ€™t let you have it. What you need, is to make the right tactical moves thatâ€™ll hike it significantly by the time itâ€™s Christmas.
Of course, there are plenty of blogs and books out there thatâ€™ll tell you how to make it happen. However, judging by the gains youâ€™ve made so far, youâ€™ll need to do something different, urgently!
If you are wondering how to improve your credit score in 30 days, wonder no more. Below are proven steps that you can take before Thanksgiving and youâ€™ll significantly improve your score before it gets to Christmas.
Whatâ€™s your credit report? Itâ€™s a summary of all your credit activity in the recent past (at most 7 years). It is prepared by each of the three national credit reference bureaus and is the main basis for calculating your credit score. Each American is entitled to a free credit report at least once a year and you can get yours on the Government website www.annualcreditreport.com.Â This article will help you read and understand your credit report.
You can also find out more about free credit scores on Credit Sesame
What do you do with the credit report? Once you have received your report, take about an hour â€“when you are least distracted by work or other issues- and meticulously comb through each account and each comment. Highlight any account with a negative status, late payment, or credit inquiries.
Also, confirm that all the accounts in the report belong to you and that your personal information, including your name, the order, your address, employer details, and telephone contacts, is accurate.
To gather the information thatâ€™ll help you file a complaint challenging the contents of the credit report.
Itâ€™s not a new thing. The Consumer Financial Protection Bureau reported last year that complaints related to credit report errors were the most prevalent amongst consumers. And the complaints bore fruit. A report by the Federal Trade Commission indicated that one in four people who filed a complaint identified justifiable reasons to have their credit score amended. Moreover, four out of five had their scores adjusted!
What you may take as a simple error, and probably have been overlooking it over the last couple of months, like an incorrectly reported late payment may just be the shot in the arm that youâ€™ll need for your credit score. It could result in a 25-point bump in your score!
Credit bureaus have a maximum of 30 to 45 days to investigate and resolve any disputes in a report. So, make it a priority to seek out any erroneous information from your credit report and file a complaint. If thereâ€™s a legitimate error, try and back it up with some documentary evidence from the creditor or court documents and your identification and file your complaint.
You could claw back those precious points in time for Christmas.
As you are combing through the credit report you will probably find yourself nodding in agreement with some negative items on the report.
It is true, that every person experiences missed or late payments once in a while. But, that doesnâ€™t mean that you cannot do anything about them and improve your credit score within 30 days.
First, if the late payment was reported erroneously, you can challenge the creditor and show them the evidence to back up your claims. Then simply instruct them to correct the error. As youâ€™ve already seen, correcting a single late payment error can boost your score by as much as 25 points.
However, if the report is accurate, some creditors can consider â€śdeleting the debt.â€ť But they do this at their discretion and on their terms. You can get in touch with such creditors and engage them in constructive negotiation. Offer to pay the entire balance in exchange for a â€śdeletion.â€ť Alternatively, you can pay part of the balance in exchange for a report â€śpaid as agreed.â€ť
Emerging credit scoring models are treating â€śpaid as agreedâ€ť less harshly than late payments, so itâ€™s worth a shot.
The same goes for collection bills. You could notice some collection bills with small balances. You can get in touch with the collection agency and inform them that you wish to â€śpay for delete.â€ť Such a negotiation may be complicated and itâ€™s advisable to get expert help. Firms like creditrepair.com or Lexington law can help you out.
Youâ€™ll need to get a written commitment from the collection agency or the creditor that theyâ€™ll fulfill their end of the bargain â€“ payment in exchange for deleting the debt. However, collection agencies and creditors often try and wiggle their way out of the words â€śpay for deleteâ€ť and youâ€™ll need expert help to ensure the commitment is foolproof.
Once you have a written commitment, make the payment and follow up to ensure that they expunge the record from your credit history. Again, most creditors will only do it if you clear the entire balance. They may also add some extra fees.
You can hack it. But if you take action now!
Another tip on how to improve your credit score in 30 days entails reducing your total outstanding debt.
Now, itâ€™ll be quite a stretch if you try to reduce the balance on secured debt like a mortgage or a car loan. Moreover, such a move will have little effect on your credit score.
However, it is possible to reduce the balances on your credit card and other short-term, high-interest debts.
You reduce the balances first to get a higher debt-to-income ratio. Secondly, if you have some large balances on your credit card and you can make payments, payments a few days before your bill is due and score big time!
Typically, card companies report your balance a few days before your credit card bill is due. So if you make the payments before the card bill is due, the card company will report a low balance.
The main idea behind reducing your credit card balance is to keep you well below your limit.
On average if you have utilized between 40-50% of your limit, your score will be below 700 but above 660. However, just making payments to less than 30% of your limit will significantly improve your credit score. On average, a person with a score of 770 has a balance thatâ€™s between 15-25% of their credit limit.
Simply take the credit report and divide your balance with your credit limit.
Alternatively, you can ask the credit card issuers to increase your limit. However, be smart when you do this. Call them up and inquire how to go about it (what you need to do and how long it takes) and ensure that you ask them not to make a hard inquiry on your credit score.
A hard inquiry eats off some of your points while a soft inquiry will not.
If you already have a good payment history with a decent card issuer, chances are that your request will be approved and youâ€™ll see a hike in your credit score before Christmas.
Intentionally using inactive credit cards will also help improve your credit score within 30 days.
On average, each American has three credit cards. However, thereâ€™s always a favorite one and one that is seldom used. Credit scoring models typically account for credit utilization. That is, how well you use the number of credit lines you have open.
You may have genuine reasons why you seldom use the cards, however, for you to improve your credit score within 30 days, these accounts must show activity. Therefore, consider charging some small payments to the barely used cards and quickly repay this money, even before the bill is due.
You can also request your spouse or anyone close to you to add you as an authorized user. Now, there may be issues of trust, however, assure them that you donâ€™t need access to the card, just to ride on the benefits of the authorized user status.
Authorized users are liable for outstanding payments (therefore, your choice must be a person with an excellent credit history.) However, they also benefit from a person who has an excellent score.
It makes no sense to go through all these tips only for you to let the ball fall with a new late payment.
New negative reports will be a harsh blow to your credit score. So, avoid them at all costs.
However, more importantly, credit scoring systems put less emphasis on older items. So, ensure that your payments are well on time and if you cannot keep up with the reminders, set up auto payments.
An excellent credit score is worth the extra fees youâ€™ll pay for these automated payments.
Moreover, as you sustain on-time payments, the credit scoring system will, over time, reward you for good behavior as the older negative reports have less impact on your score.
This move, as well as the other tips, will significantly improve your credit score within 30 days and ensure Christmas stays jolly.