8 Ways To Rebuild Your Credit Score

A poor credit score makes your financial management highly expensive and frustrating. Your credit score reflects how good you are at managing your finances. According to FICO Scores, about 35% of the US adult population with bad to fair credit scores experience this feeling firsthand. Want to know how to rebuild your credit score? You’re in the right place.

Good credit scores help you qualify for the best credit cards and good interest rates on different types of loans you may apply for. Since these credit scores reflect on how responsibly you manage your debts – rebuilding them needs you to make regular on-time payments of the debt.

A good credit score also helps you bag the best terms and conditions for the applied loan, mortgage, and new credit card with the lowest interest rate possible. It also affects the payment you pay for insurance. It can also help determine whether or not a utility company should ask for a deposit before providing their services to you.

We’ll discuss the guide to rebuilding credit score with a bird’s eye view and finding out how to manage your financial life in a balanced way. 

Best 8 Ways To Rebuild Credit Score

When you fail to manage your finances, you will face financial challenges. As a result, your credit scores suffer. Ways to rebuild your credit score is time-consuming because you cannot get them to rebuild with a secret. 

The only magic you can do is change your financial management practices. Rebuild your credit scores needs patience, consistency, and vigilance over factors influencing your credit scores. 

The most important thing you need to have is a plan according to your individual needs and strategies. Having said that, the following are some helpful ways that remain constant even in different situations.

Here are eight ways that can help you rebuild your credit score; 

1. Review Your Credit Reports

Accessing your credit reports from the three primary credit bureaus – Equifax, TransUnion, and Experian is very easy. 

Reviewing your credit reports helps you pinpoint all the negative factors hurting your credit score. It also helps in finding information that is either mistake or suspicious. These pieces of information may include; invalidated accounts, balances, late payments, etc.

It can also help you show if you are a victim of identity theft by recognizing the credit inquiries you never have. 

For these reasons, you must review your credit reports once every year and pen down the issues causing you to have a low credit score. 

2. Add Utility Bills Accounts To Your Credit Profile

If you think you are good at paying your utility bills – cell phones, cable, and internet bills- then you add these accounts to your credit profile via Experian Boost. Signing up with Experian Boost will improve your credit score by looking at your utility bills. 

They may find the increase a little less, but every point counts when your scores are low. It will improve your FICO scores by 12 points, on average. 

3. On-time Bill Payments

Paying all your bills on time every month without missing any due dates makes a huge difference in your credit scores. You can set reminders or even schedule your payments through your accounts to avoid missing any due dates.

On-time payments On-time payment is a good credit habit practice. It can single-handedly help you rebuild your credit score with a higher ranking. Regardless of how small you are paying, on-time payments bring huge differences in your credit scores.

Bring all your overdue accounts to current, if you have any, and then start making timely payments. Over time, your credit reports will experience an increase in scores.

4. Avoid Getting Closer To Your Credit Limit

Financial experts say that you should not use your credit limit of more than 30%. The credit scores do consider how much you spend from your credit limit and how close you are to being maxed out on your credit cards. 

Using too much of your credit card limit hurts your overall credit score. It is better to bring your credit limit utilization to a single digit to reap more benefits.

5. Avoid Applying For Too Much Credit 

The credit scores also go down when you apply for too many credit requests in a short period. It includes new credit cards or new accounts that can help you balance transfers or get some discount offers. 

According to the FICO scoring model, applying for too many credit loans and credit cards does hurt your credit score. It becomes a red flag for creditors and lenders that you are suffering from a financial issue. 

Lenders conduct a hard pull to see if you are eligible for a loan you applied for or not. The hard pull inquiry leaves a negative footprint on your credit report, so it is advisable that you avoid applying for multiple credit loans in a short period. 

6. Become An Authorized User 

You are becoming an authorized user on your friends or family card who have a good credit score. It is yet another way to rebuild your credit score. You will receive your credit points when you purchase being an authorized user, and the credit responsibility will remain in the hands of the primary account holder. 

However, the credit card company will report to the credit score bureau agencies for the credit account – the authorized user and the person who has authorized you for their account. 

But be careful while becoming an authorized user it comes with its risks. If any of the two cardholders use a high balance, it will hurt the credit scores of both users. It would be best to always tie your credit score to people you could trust.

7. Get A Secured Credit Card 

Another way to get your credit score in a better place you can apply for a secured credit card. You can use the card as you use your traditional credit card. It is called a secured credit card because you open your secured credit card account with a certain amount as a deposit.  

Companies like Capital one send credit statuses to credit bureaus when you use secured credit cards. So as long as you are using your credits responsibly and making on-time payments, your credit scores will only improve more. 

8. Patience and Persistence 

It might be hard to rebuild your credit score. It requires time to undo the damage you have done over the years. Patience and good credit habits will help you reach your goal quickly. Time becomes your ally if you take the right cautions, and everything will start falling in its right place. 

The negative imprints can sit for at least seven years on your reports, but if you give your credits time to make up for the damages that have been done, you can easily get rid of these negative imprints within a few years.  

Conclusion

Believe it or not, ways to rebuild your credit scores take time. Depending on your actions and situation, you may want to know how long it takes to do so completely. Every small or big action that includes your current credit score, influencing factors, etc., plays an important role in how long it will take to rebuild your credit score.

It might not sound very appealing, but when you think you want to rebuild your credit score, you have to become the change you want to see in your credit report.