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Need a Credit Fix
4 Jan 2018

Need a Credit Fix? Here Are The Steps You Can Take Right Now

Are you looking for a way to jumpstart your credit score quickly?

Your credit score is an important part of your financial identity. Good credit scores can help you land those personal loans you need, get a mortgage, and buy a new car.

Things happen, though, and it’s easy to tank your credit. A lot of people assume that bad credit is permanent, but this really isn’t the case.

It is possible to take charge of your credit score and send it soaring. Read on to learn about the things you can do now for a rapid credit fix.

1. Understand How Credit Works

To start things off, knowledge really is power when it comes to credit scores. Make sure you understand how credit works so that you can manage a high score in the future.

In general, your FICO credit score is affected by the balance on the card in relation to the credit limit. Most financial institutions recommend keeping your balances at around 30% of the credit limit. This is a golden rule to keep in mind for future accounts you may hold.

So, for example, if you have a $2500 credit limit on a card, you’ll want to keep your balance at around $700-750 per statement cycle.

You also build credit by having long relationships with credit cards. The longer you have a credit card, the more credit you’ll be able to build. It’s actually wise to have a couple credit cards at once so that you can have several “relationships” going at the same time.

You can affect your credit score by how often you use these credit cards, too. Not using a credit card very much can actually hurt your score.

You can also build credit by taking out loans. Common loans that can help build credit include auto loans, student loans, and mortgages.

People with high credit scores have a few credit cards, pay off their balances on time regularly, and keep balances at thirty percent or below of the credit line.

2. Increase Your Credit Line

One way that you can get a quick credit fix is by increasing the credit lines on your accounts. While you don’t want to increase these too much, a little boost will mean that your credit card debt will take up a smaller percentage of your limit.

So, for example, if you increase that $2500 credit line to a $4000 credit line, your balance of $1500 will only be about thirty-seven percent of the credit limit.

As mentioned above, keeping your debt at around thirty percent of each credit line is important. Going beyond this percentage can harm your credit score further. Do some quick calculations to determine how much to increase credit lines to hover at this golden thirty percent.

Aren’t sure if you can increase your credit line? Call your credit card company to see if this is possible. Credit lines are often based off of reported income and borrowing history.

If you succeed in increasing your credit limit, make sure you don’t spend more to reach this limit. You should only increase your credit line in order to get a credit fix, not to enable more spending.

3. Reduce Your Debt By Just the Right Amount

Obviously, reducing debt can give you a credit fix–and it’s definitely easier said than done. But reducing debt doesn’t mean paying off all of your credit cards all at once.

You can chip a little of your debt away at a time in order to boost your credit score. If you don’t want to increase your credit lines, calculate how much you’ll have to pay off per card to lower your balances to thirty percent of the credit limit.

So, for example, let’s say you’ve got that $1500 balance on a $2500 card. You would have to pay off $750 to get this balance down to thirty percent of the credit limit.

Even if you can lower each card balance by a small percentage, this can impact your credit score positively. You may not be able to fork over $750 all at once, but you could lower your balance down to $1200 or even $1000 to lower that credit utilization score.

4. Go Through Your Credit Report

Your credit report gives the detailed low-down of your credit score, including all of the debt that you owe and accounts you have open. Credit bureau’s release these reports and you are entitled to one free report a year.

Financial lenders take a look at your credit report when determining your eligibility for a loan or mortgage.

Believe it or not, these credit reports frequently have errors in them. If reducing debt or increasing your credit line isn’t going to swing it, start by perusing your credit report and inspecting it for mistakes.

By law, negative information on your credit report has to be “dropped” after seven years–this is good to know when inspecting your report for errors.

If you do find an error, you can file a dispute with a credit bureau. Don’t worry–this won’t mean a lot of waiting around on your part for the bureau to get around to your dispute.

You’ll have an answer within a month of filing, and corrections should be posted immediately.

5. Hop On Board A Friend’s Card

A lot of cards enable card owners to add an authorized user to their account. If a family member or friend has really good credit and is open to the idea, see if you can become an authorized user of their card.

You’ll automatically be linked to good credit, which can give you the credit fix you need. In fact, a great way to start building credit if you don’t have any–or have a bad credit score–is to become an authorized user of an excellent borrower’s card.

Make sure you have a discussion with this family member or friend first before this happens, and be clear on credit limits and uses.

6. Pay the Minimum Payments on Time

If you’re struggling to make ends meet and simply can’t manage many bill payments at this time, see if you can just pay the minimum payments of your accounts.

Many credit card companies only require small minimum payments, even as low as $25 per card.

While you are at it, go through your payment history of every account and catch up on late or missed minimum payments. Paying the minimum amount on time can boost your credit score a wee bit.

You’ll definitely get a more serious credit fix by paying larger amounts of the balance on time in the coming months.

Another good thing to set up are payment reminders. You can get these in the form of alerts, sent to your email inbox, cell phone, or snail mail address. This will ensure that you don’t miss any payments in the future or acquire any late fees to add to your balance.

7. Don’t Shuffle Debt Around

You may be tempted to get a balance transfer in order to pour all of your debt into one account. This can actually harm your credit score rather than boosting it, particularly if you’ve had a history of balance transfers.

Keep the debt you have on the cards you own, and focus on reducing the debt per card individually rather than shuffling it around.

It’s also important not to open any new credit cards for more credit. This can also harm your credit score rather than giving you a credit fix.

8. Keep Your Credit Cards

Some people think that canceling existing accounts will get rid of the debt, but this doesn’t happen. Remember that credit is built by having long relationships with certain accounts.

Closing an account can also harm your credit score. Hold on to the cards you currently have and don’t acquire any new ones.

9. Talk to Someone Who Knows

While there are ways to get a quick credit fix, the most important thing to do when it comes to boosting your credit score is to build habits for a good score.

One way you can do this is talk to a financial advisor or counselor. You can even chat with representatives from your credit card companies when it comes to discussing payments and credit.

How to Get a Credit Fix Fast

Sometimes you just have to get a high credit score, and fast. Maybe you need to take out a personal loan to pay for an emergency, or get a mortgage on a house. Whatever the case, it is possible to get a credit fix in a short amount of time.

Begin by understanding how credit works and inspecting your credit report for errors. Also reduce your debt strategically so that your account utilization percentage is low. See if you can become an authorized user for an account with high credit, or talk to a financial counselor for tips managing credit in the future.

At Bonsai Finance, we are here to help you understand credit and make the most of your score. Check out our learning center for more information about managing credit.

If you’re here to explore getting a personal loan, head on over to our loan department to get started.