Have you maxed out your credit cards and missed some payments? It takes a few due date oversights to chip away at your credit score. Once that happens, many doors can shut. You can’t get a low-interest car loan or a platinum credit card from the bank — talk about being in a financial pinch.
Take a minute before you throw in the towel. Even if you have several skipped payments, your credit score can recover. Please make no mistake, and it’ll take some work and time. If you stick with it, you can have financial freedom again. Read through and follow the seven tips below to have a top-notch credit score.
1. Try a Secure Credit Card
Credit cards play a significant role in your credit score. However, they aren’t all the same. The ones you get from your bank, unsecured cards, are based on your income and your payment history. The bank is less likely to give you one if your credit score isn’t great (less than 670). To them, you’re a liability.
That doesn’t mean you have to go through life paying for everything with cash. You have another option — a secured credit card. You make an initial deposit or funds transfer, which becomes your credit limit. Then, you use your secure card just like a traditional credit card. Be sure to make on-time payments, and you’ll start to see your credit score climb.
2. Watch Due Dates
Pay attention to bill due dates before getting your payments in on time. Your credit score takes a hit if you don’t get your price early enough. With all that goes on in life, keeping track of those “pay by” dates can be tricky. Set yourself up for success with a tech solution.
You likely already use your smartphone as a calendar, so consider adding a bill payment alert to avoid missing deadlines. Set the watch to ping you a few days before your bill is due, and you can even get your payment in early. Get into this habit and stop worrying about late fees and missed charges. That’s a significant bump to your credit score!
3. Apply for Store Credit Cards
How often have you been offered a credit card application when shopping for clothes or electronics? Almost every time, right? Your first instinct might be to pass but consider filling out the form next time. It only takes a few minutes and can help your credit score rebound by increasing your total accounts. Creditors want to know you can responsibly manage a mix of credit types.
Store cards typically have lower spending limits than bank cards, but keep in mind that interest rates for store cards are higher. Ultimately, the critical thing to remember is getting a store card can be more accessible, which means you can start showing good payment history faster.
4. Control Your Credit Pulls
Don’t sign up for every credit card you can, though. Each time you apply, the company needs to see your credit history. These “pulls” can negatively affect your credit score. If you’re going after a pre-approved credit card offer, that’s a soft inquiry that won’t lower your score. A brand-new card application will result in a hard pull. You’ll lose a few points that won’t return for years.
Having too many credit pulls can also be a red flag. If you fill out multiple applications simultaneously, banks will think you’re in financial trouble. Being labeled a risky bet can lead to rejected applications and a falling credit score. Be selective when applying for new cards.
5. Get Authorized
When you’re struggling financially, it can feel lonely. It doesn’t have to be. If your family or friends are willing, they can help you rebuild. All it takes is making you an authorized user on their accounts. You can use the card for purchases, but they’re responsible for the on-time payments.
You can also benefit without making purchases. You get the credit score bump just by being attached to the card of someone with a good credit score and responsible payment habits.
6. Capitalize on a Short Credit History
Your credit score is directly linked to your credit history. It would help if you worked harder when younger with fewer accounts to show you’re financially trustworthy. Don’t stress. It’s possible to show you’re reliable even with a short history.
You can use several financial tools to show the credit bureaus you’re responsible for. Use RentTrack to share your on-time rent payments. Experian Boost can highlight utility payments and banking history. UltraFICO can showcase details about your checking and savings accounts, as well as your online bill payments and banking history.
7. Create a Debt Bundle
How nicer would it be to have one bill to keep track of rather than a bunch that stacks up? With one account to manage, the chances you’ll miss the due date are much lower. Consider making things easier on yourself and bundling your debt into one bill.
Combining your debt into one lump sum initially shaves a few points off your credit score. However, that doesn’t last long. On-time payments for one bill can kickstart the rebuilding process quickly. Your debt will shrink, and your credit score will increase.
Dealing with your finances can be tricky. It only takes one or two missteps, and you’ll wear credit score handcuffs. While unlocking the shackles doesn’t happen overnight, these steps can loosen the restraints. Soon you’ll have a more robust credit score to help you reach your financial goals.
