A high credit score opens a lot of doors in the United States, especially if you’re looking for a loan. If you’ve had a financial setback that resulted in a lowered credit score, here’s the lowdown on how to get your score back up to where you want it to be.
It’s as American as Apple pie, a dish we all love – but most Americans, at best, enjoy a love-hate relationship with their credit score. It’s just a number, but one that can have a huge impact on your overall financial health and purchasing power. Just like everything is bigger in Texas, everything is better when your credit score is higher.
However hard you try to keep your credit score flying high, life sometimes takes a wrong turn, leading to setbacks. Something as simple as a missed or forgotten payment can quickly leave you in trouble and damage your credit score in what feels like seconds – and regaining those points or even getting them higher can feel like pulling a tooth out.
Are there ways you can quickly improve your credit score – or is it a hopeless quest? As it turns out, there are some things you can do to get your credit score back on track.
Consider the Reasons Your Credit Score Dropped
First things first: why did your credit score drop in the first place? A single missed payment will hurt for a short while, but multiple missed payments over a period will build up and hit harder. The size of your debt also affects your score; a late mortgage can impact your credit score for a whole year.
Bankruptcy is very damaging, with the potential to land you in the doghouse for as long as a decade.
Look Back Over Your Credit History
As stock market watchers know, past performance is no guarantee of future results, but it does provide a bigger picture. If your historic credit scores are great, then it will be hard to improve on them – after all, you’re already topping out. Conversely, a low credit score reveals poor financial management, and it is hard to make it worse.
Ironically, this means people with great credit scores and an overall clean record get hit harder by mistakes, even though they otherwise do everything right.
Analyze the Reasons Your Credit Score Dropped
Paying your bills on time is one of the most common – and effective – ways to boost your credit score, with improvements typically shown in six months. If you really want to fight back, you can also check your credit report and dispute errors. Got a balance on a credit card? Pay it off and reduce your credit card utilization ratio to get a sweet boost.
If you have a trusted friend willing to help you out, you can also ask them to let you be an authorized user on their card. This only works if they have good financial habits themselves, so choose wisely.
When it comes to maintaining a healthy and high credit score, prevention is better than cure. For most of us, that means keeping a close eye on your bills and credit cards and sticking to a monthly budget. While it’s OK to treat yourself from time to time, be wary of the true cost of your purchase and avoid buying non-essentials that you cannot truly afford. In time, your score will increase, and you’ll enjoy a much better financial outlook with all the choices that come with it.