Financial problems seem multiplied when your credit score is bad. It is amazing how many aspects of life a bad credit score can affect. Everything from buying a home, paying off debt, and even finding a job can be negatively affected with a poor credit score. Thankfully, you can rebuild your credit quite quickly with the right moves. Follow these three steps to have a better credit score by the end of the year.
1. Find the Right Secured Credit Card
Credit cards got you into debt in the first place, so why would you want to sign up for another one? It is true that irresponsible use of credit cards can lead to many financial problems. However, when you have poor credit, a secured credit card is the fastest way to build your credit up again. Most secured credit cards require you to have a security deposit, costs an annual fee, and have higher APRs. The point is to find a secured credit card that has the best fee and is tied to other well-established cards. Most credit card companies want you to fix your credit score quickly so that you can get another credit card with a higher limit and pay them even more. However, you can use this to your advantage by just sticking with the secured card until your credit score is back up in the good area. Capital One and Wells Fargo both have reputable secured cards. The point is to use your secured card monthly, keeping your purchases to about $200-400. Then you will want to pay off your amount each month, to avoid paying interest and to establish a good standing with the credit card company.
2. Get a Detailed Report of Your Credit Score
My husband had a hard time getting approved for many lines of credit, which was strange since he hadn’t done anything to give himself a poor credit score. However, due to his employment, he had a thorough background check. The investigator on his case came back to him and asked why he had two bankruptcies and other big hits on his credit score when he was so young. Those big hits were actually his father’s, but the credit monitoring companies linked my husband to them because he has the same initials as his father. Did you catch that -same initials, not same name, birthday, or even social security number. It was such a careless mistake that it is very possible that you could have a simple but costly mistake on your report too.
3. Focus on Tax Debts First
If you have unsettled debt with the IRS that resulted in a lien, that is the first matter to conquer. As soon as you pay off that tax or set up a payment plan with the IRS, you can then request for the lien to be taken off your credit score. This should boost your score by many points.
These three tips will help you to rebuild your credit fast. However, do know that credit scores do not go up overnight. If you follow these tips, you should expect an improved credit score within a month, and a much better rating in a year.