25
Feb

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There’s no time like the present to raise your credit score. A good credit score can open the doors wide to many opportunities for making your financial future a golden one. For those of you who possess less than sterling credit scores, don’t be afraid to embrace creative methods for increasing your credit numbers. Fortune favors the bold. As long as your methods are legal, it’s okay to think far outside the box.

1. Learn From Your Previous Financial Mistakes.

Albert Einstein once said, “Insanity is doing the same thing over and over again and expecting a different result.” If you’re really serious about improving your credit score, then you absolutely must learn from the mistakes you’ve made in the past. This doesn’t mean you have to beat yourself up for earlier mistakes, but look at your past financial history in a sober, clear-eyed way with an eye on doing better in the immediate future. Carefully analyze your past behavior with money, and ask yourself the following questions:

  • Do you have a habit of spending too much when you’re shopping?
  • Have you been sloppy and careless about paying your bills on time?
  • Are your bills too high for your monthly income to cover?
  • Have you been prone to impulse purchases in the recent past?

If you answered, “Yes” to one or more of those questions, then those are financial mistakes that you need to begin addressing immediately.

2. Using Any Way Possible, Increase Your Income!

For many people, the reason why they have a poor credit score is that they’ve made mistakes and don’t have enough income to repair them. If your job isn’t paying enough, consider these options:

  • Try to get a raise in salary. If you don’t ask for it, it probably won’t happen.
  • If your employer won’t give you a raise, consider getting a better job.
  • Start a small business using one of your skills like car repair, writing résumés, sewing, babysitting, pet grooming, and the like.
  • Try selling items you make or pick up at thrift stores on the Internet.
  • Try renting out a spare room in your home.
  • Get a part-time or weekend job, like manning a food vendor’s stand at street fairs, working as a movie extra if there’s a film production in your area, or working in retail or at a fast food outlet. Seasonal work in retail stores can be an excellent opportunity for racking up a lot of hours in a couple of weeks.

The more income you have, the quicker you can pay down your debts, improve your debt-to-income ratio, and start rebuilding your credit score.

3. Focus On Paying Off Delinquent Debts First.

When you are figuring out which debts to pay first, always pay the oldest debts, and any debts that have been declared delinquent. Under the old method for calculating FICO scores, any delinquent debt counted against your score. However, since with the newest versions of FICO and VantageScore, when you pay off debt in collections, you will see a rise in your credit score.

4. Make The Most Of Any Free Financial Advice You Can Get.

If you’re deeply in the hole with debt and have a low credit score, then you should certainly be looking for some help with your finances. You can always go to your bank for help. Banks not only want you to make deposits, they are willing to help you manage your money, give investment and savings advice, and arrange for face-to-face meetings with an officer of the bank to aid you in making sound financial divisions. Always go for the free help before spending any of your precious funds.

5. Take Advantage Of Tax Season!

Most people regard tax season with the dread they might feel at facing down a live cobra, but really it is all a matter of attitude. Even though filing your taxes can be a major pain, if you’re expecting a sizeable tax refund, it could work to your advantage in helping you to repair your credit. Instead of squandering your tax return, use it to pay down your outstanding credit card debt, or make an extra payment on your mortgage to help pay it off faster.

6. Have a Range of Credit Types.

The types of credit you have does make a difference when calculating your credit score, as a matter of fact, it’s 10% of the total. In general, lenders like to see that you are able to handle a range of credit types well, and the credit-scoring model favors those that have a mix of credit. Having some form of revolving credit — such as credit cards — and some installments types of credit — such as a mortgage or auto loan — is better than having only one type of credit.

7. Practice safe banking, safe computing, and safe business practices.

To stay safe from identity theft, always follow safe banking and financial practices:

  • Keep account numbers and PIN numbers safe. Cover your account and PIN numbers when using debit at the store and refuse to give your PIN number to anyone. Avoid writing down your PIN and account numbers — you never know when this information could fall into the wrong hands.
  • Make sure you have firewall and antivirus software installed on your computers, tablets and phone so hackers can’t access your sensitive information.
  • Shred all bank and credit card statements.
  • Never buy anything online that does not use an encrypted system for collecting payment.

8. Beware of Credit You Don’t Use

Terms for credit cards change all the time, and this is perfectly legal. Cards that were once annual fee-free may have all of the sudden become ones that add a fee to your credit card balance every year and this fee could go unpaid if you are not paying attention to your statements. Saving paper is also popular these days, with many people opting to go paperless, which can decrease the attention you are paying to your credit card statements and the due dates to little-used accounts. If you have more accounts than you can reasonably monitor, you might want to close out these accounts. Beware that closing these accounts can make your credit score go down temporarily because you are lowering your total credit limit. However, the small drop in score may pay off long-term.

9. If You Have Bad Credit, Establish Better Credit by Taking out Credit and Repaying it Quickly.

If you have terrible credit following a major delinquency like a bankruptcy, foreclosure or credit card default, you may need to get back into a good credit rating by taking out a loan you can handle. One sure fire way to do this is to open a savings account or other investments like a Certificate of Deposit, then borrow against it at your bank or credit union. As long as the bank reports the loan to the credit bureaus, you will get credit for this and it will help to boost your score.

 

Related Articles:

The 4-Step Credit Score Hack

Ways to Improve Your Credit Score in 2016

Six Common Credit Score Questions


Posted in Credit Score