6 Ways to Fix Bad Credit Quickly
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Most people don’t have the wealth to make huge cash purchases. Examples include tuition fees, new automobiles, and houses for sale. These and similar expenses are simply too expensive for the average person to pay directly.
The good news is that people can make large purchases without having the funds immediately available. This is done through something called lending. Banks and other financial institutions lend you the money to make a big purchase, and you pay them back over time.
However, lenders do not provide loans out of kindness or generosity. They charge a fee for the lien – called interest – which is added to the principal sum. Also, they generally avoid lending money to people with bad financial backgrounds. They do this – in part – by looking at credit score.
If you have bad credit, your financial options are limited. It’s hard to get approved for loans, rental applications, and even some types of jobs. With this in mind, it is essential to repair bad credit as soon as possible.
You don’t know how? Carefree. We have what you need. Here are six ways to quickly fix bad credit:
Get a credit builder loan
The first step to repairing bad credit is to establish a positive credit history. This can be done by getting something known as credit builder loan. Unlike traditional loans, credit builder loans require you to make monthly payments first. Then, when you have made your final payment, the funds are deposited into your account. All the while, those on-time payments generate a positive credit history. Simply put, credit enhancement loans take all the risk out of borrowing while providing all the credit-boosting benefits.
Dispute errors on your credit report
Have you recently checked your credit report? Everyone in the United States has the right to check their credit report for free, so take advantage of credit monitoring. While doing so, you may notice a negative entry that does not correspond to reality. You can file a dispute to have this negative credit history removed from your report. This helps to significantly increase your credit score.
Pay your bills on time
It goes without saying, but we’ll say it anyway: paying bills on time is essential to having good credit. While a missed payment or two every once in a while probably won’t cause your score to drop, you don’t want to take the risk. From your phone bill to your car bill to your utility bills, paying before the due date is essential to keep your credit score going up, not down.
Pay off credit card debt
According The bank rate, the average American has a credit card balance north of $5,000. Whether this hurts their credit score depends on the ratio of debt to available credit, commonly known as the credit utilization ratio. Generally speaking, those who use 30% or less of their available credit tend to have better credit scores. With that in mind, be sure to pay off those credit card bills as quickly as possible, starting with the ones with the highest interest rate.
Request a credit limit increase
It sounds counterintuitive, but getting a credit limit increase is an effective way to boost your credit score quickly. In effect, this instantly lowers your total credit utilization rate. Unfortunately, getting approved for a credit limit increase is tough when you have bad credit. Generally, the only way for someone with bad credit to be approved is to prove that they have increased their annual income. So if you recently got a raise, consider this option as a way to improve your credit.
Start using a secure credit card
Secured credit cards are similar to credit builder loans in that they allow you to get benefits to increase your credit without risking getting in over your head. It works like this: you put up a cash deposit as security and you have access to a line of credit of equal value. From there, the process is identical; assuming you make your payments on time, the deposit will be returned upon completion while your credit benefits from the positive payment history.
Loans and lines of credit give people access to things they otherwise could never afford. These include higher education, motor vehicles and residential real estate. But it ultimately depends on their credit score. With that in mind, doing what it takes to rise above bad credit is essential if you ever want to qualify for a loan.