Your credit score is checked by lenders, landlords, insurers, and even recruiters. It affects many years of life, so a poor total has far-reaching implications.
If your current result is disappointing, there are ways to fix it. Do not expect to boost the score overnight, though — this takes months. Follow our guide to fix your status as soon as possible.
Unfortunately for borrowers, bureaus responsible for compiling their histories are not infallible. Reporting errors are more common than you may think — around 20% of Americans have unjustified scores due to inaccuracies ranging from misspellings to false accounts. Correction, referred to as a repair, is a lengthy process involving formal correspondence and disputes.
1. Repairing or Rebuilding?
Begin with the critical question: “Is the score fair?” If it is not, you have a right to obtain an increase through formal disputes. By law, all three reporting agencies are obliged to store only factual and complete information. If any item turns out to be unverifiable or unsubstantiated, it must be deleted. Review top rated companies in the credit repair sector to find a trusted provider in your area.
If the calculation is correct, the drop was caused by your financial behaviour. Typical mistakes include overusing credit, missing payments, and submitting too many loan applications within a short period. To work out the fastest ways to improve credit score, learn about the factors used in the assessment.
Both FICO and VantageScore (the two most popular systems of evaluation in the US) rely on a scale from 300 to 850, and they consider a similar mix of factors. Generally, your prior payments and overall debt are the most important. This knowledge allows experts to prioritize disputable errors for repair. For example, late or missed payments determine 35% of FICO and 40% of VantageScore.
Any American may check their scores and reports online. To find the total, go to My FICO, or download an app like Credit Karma. The reports from all three nationwide bureaus are available on www.annualcreditreport.com. Until April 20, 2022, the files may be downloaded free of charge once a week.
2. Evaluate the Length
How many points do you currently have, and what is your target? Note that getting to 850 is not necessary, as lenders do not price their products for the top category (800-850 in FICO). Once you reach 800, all the best conditions and interest rates become available automatically.
If you need to fix the score for a particular loan, consider the provider’s requirements. How soon you will meet them depends on where you stand, and what strategy you employ. Generally, the fastest results are achieved when consumers repair and rebuild their histories simultaneously.
Simple cases of repair take a couple of months. Why so long? Every dispute letter launches an internal investigation that lasts for 30 or 45 days. Afterwards, the bureau accepts your changes, rejects them or asks for additional information.
The more inaccuracies you want to dispute — the longer it will take. The providers charge you monthly, so the longer you use their services the more it costs. While every citizen may initiate disputes on their own for free, hiring an agency accelerates the process. Credit experts are adept at detecting errors and collecting sufficient evidence from the get-go, so you are likely to get quicker results.
As you can see, it is vital to monitor one’s borrowing history continuously. Collect your reports regularly to spot errors and fix them fast. Do not wait for inaccuracies to mount. Some consumers do not suspect they are victims of identity theft until they check their records. Complicated scenarios may span half a year or even longer. Take precautions, and work on your borrowing habits to enjoy a favourable score.
Typical Rebuilding Strategies
One of the fastest ways to get a score rise is Experian Boost. This free service allows you to include additional information for the assessment. Utility payments, HBO subscription and phone bills may all work to your advantage. On average, consumers gain 12 points. Naturally, this is not enough for someone in the “poor credit” category. Alternatively, you may:
Work With Balances And Limits
The less of your limits are used — the better for the total. Utilization defines 30% of your FICO status. Divide the sum of balances by the sum of limits to see where you stand. Experts recommend sticking to 10%. For example, if you have 4 credit cards giving access to $4,000 in total, you should not use more than $400 collectively.
To tilt the proportion in your favour, reduce the balances or extend the limits. The latter can be done by requesting an extension or getting a new card from another issuer.
Become an Authorized User
If you have a relative or friend with a positive borrowing history, ask to be included on their account. This will add their limit to your report, which is also favourable for the utilization ratio. However, if the account holder is irresponsible, you will only exacerbate the problem.
The Bottom Line
Credit scores do not jump overnight, so plan ahead. Repair takes 3-6 months on average, and it is not a science. If your score is spoilt by your own mistakes (e.g., missed payments), reconsider your budgeting. Knowing what factors influence the score, you can raise it more quickly.
