If you are struggling with bad credit in this economy, if it’s any comfort, you’re not alone. A poor credit score can make it harder to buy a home, lease a car or even rent an apartment. However, there is some good news on the horizon, as turning bad credit into good credit is possible and faster than you might think.
What you need is a strategy, and fortunately, you can simply try the following seven tips to boost your credit score, improve your financial health and open the door to better opportunities. Here’s how to start rebuilding your credit today.
1. Get a Secured Credit Card
Getting a secured credit card can help you build up a positive payment history. This can be crucial in helping you quickly improve your credit score, and you may even start to see improvements within 60 days if you use the secured credit card responsibly and make payments on time.
Keep in mind that secured credit cards are easy to qualify for, even if you have poor credit. You simply provide a deposit to the credit card company, which becomes your credit limit. This means that if you default on payments, the credit company is protected.
Find Out: Suze Orman Reveals the No. 1 Bill You Should Pay First Each Month
Read Next: 6 Safe Accounts Proven To Grow Your Money Up To 13x Faster
2. Prioritize Paying Off Debt
Credit card debt typically comes with steep interest fees, which can be a hurdle to pay down, because that interest just keeps accumulating. It’s essential to tackle this debt ASAP. You can do this in a couple of ways:
- Snowball method: This method focuses on paying off the smallest balances first to work through your debt. Consider this if you are motivated by little wins that will help you stay the course to pay off a higher debt balance down the line.
- Avalanche method: This method focuses on paying off the debt with the highest interest first, which can help you save more in the long run. Remember, it does require more due diligence from the start and a firm budget.
3. Dispute Credit Report Errors
Mistakes happen, even on your credit report. Be sure to scour yours for any errors regularly. If you find any, dispute them with the appropriate credit bureaus as inaccuracies on your report could be costing you points, so make sure to take the time to review it for potential issues.
4. Don’t Miss Payments
Did you know that just one missed credit card payment can do damage to your credit score? That means when you’re trying to improve your credit score, the last thing you want to do is flake on paying your minimum balance.
Try building a budget that prioritizes paying the minimum, or better yet, the full balance, each month. This is the best way to help improve your score quickly and maintain a stable one in the long term.
If you are on top of your payments, another great way to boost your credit score is to make payments twice a month.
5. Don’t Apply For Too Many New Lines of Credit in a Short Period of Time
It’s so easy to apply for credit cards, but you must avoid the temptation when trying to clean up your credit. In fact, too many applications in a short window will significantly lower your score, especially if the applications are declined. When you apply, your credit is checked with a hard inquiry, which can cost you several points and can stay on your report for up to two years.
6. Don’t Close Credit Cards
When you’re tackling debt, it may seem intuitive to close credit cards. Paradoxically, this can actually cause more trouble for your credit situation. The length of your credit history is another factor that influences your score, so having older lines of credit still open but utilizing them smartly can actually help benefit your score as you work to repair it.
7. Use a Credit-Building Tool
If you have poor credit, you might want to consider enlisting the help of a credit-building product, such as CreditStrong. For example, CreditStrong’s Revolv tool helps you build up your credit score without the risk of going into debt. This tool basically asks you to commit to contributing a certain amount to a savings account each month, and those monthly deposits get reported to the credit bureaus as if they were credit card payments.
More From GOBankingRates
- Trump's $2K Dividend: Who Qualifies and How You'll Get It
- 6 Must-Have Winter Clothing Items To Buy at Costco
- How Middle-Class Earners Are Quietly Becoming Millionaires -- and How You Can, Too
- 5 Things You Must Do When Your Savings Reach $50,000
This article originally appeared on GOBankingRates.com: 7 Ways To Go From Bad Credit to Good Credit
