If you're like most people, the recession took a toll on your finances and probably your credit score. So how do you get it back to where it needs to be? While it usually takes seven years for any negatives marks to be removed from your credit report, there are a couple quick and simple ways to you can raise your credit score now. Here are a couple to keep in mind.
1. Keep paying things on time: The most important thing to remember is to keep your credit report clean from here on out. Pay your bills on time. Make sure you aren't over your limit on any of your credit cards. Keep the balances on your credit cards low. Keeping your finances clean is the best way to raise your score.
2. Don't cancel any of your credit cards: This may seem counterintuitive, but canceling credit cards actually lowers your credit score. Part of your credit score is based on how much credit you utilize (your credit utilization score), so the more credit you have available, the higher your credit score. If you cancel a credit card, you no longer have that credit available, which lowers your credit utilization score, which in turn lowers your credit score. Even if you've paid off a credit card, keep it open and gather up the extra points you get from having that extra line of credit. If you qualify, you can also apply for a new credit card to raise your credit utilization ratio, although don't apply for more than one. Applying for too much credit at once can lower your score. Here is a good list of the best rewards credit cards that can help you save money and raise your credit score.
3. Open the lines of communication with your credit card lenders: If a bunch of credit card debt is keeping your credit score down, talk with your credit card lenders to see if you can strike a deal to pay off that debt. Many lenders are open to making deals with you, since all they are really after is the money you owe. Just remember, if you do make a deal with a lender, ask them how they will be reporting it to the credit bureaus. They have two options: "Paying as agreed," which won't hurt your credit score, or "Not paying as agreed," which could bring your credit score down. Make sure they are reporting it as "paying as agreed" before you agree to any deal.
4. Sign up for a secured credit card: If your credit is so bad that you keep getting denied for a credit card or loan, try signing up for a secured credit card. Traditionally, you put down a "deposit" for a secured credit card that ends up being your credit limit, so it doesn't matter how bad your credit is, secured credit cards are available for everyone. Just make sure to apply for a card that reports to all three credit bureaus, otherwise having the extra line of credit won't affect your credit score.
5. Make sure there are no mistakes on your credit report: Over 42 million people in this country have errors on their credit report, and 10 million of those have errors that affect their credit score. Make sure you are regularly checking your credit report to make sure there are no mistakes and that you haven't been a victim of identity theft. Fixing simple mistakes on your credit report can be a quick way to boost your score. Each of the different credit bureau has instructions on their web sites on how to fix an error, or you can hire a credit repair service to do the work for you (as well as try other methods to raise your credit score.)
Keep in mind, the only guaranteed way to raise your credit score is to keep your report as clean as possible and wait until negative information expires from your credit report, which takes seven years (some bankruptcies take 10 years.) As new positive information appears and old negative information disappears, you'll see your score start to rise.
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