People with bad credit often think that they’re stuck with bad credit for the rest of their lives. They often feel powerless to do anything, and the huge amount of debt and collections in front of them seems insurmountable. The truth is that you really can improve your credit. It all begins with setting small goals and watching your credit score shoot through the roof. Here are five things you can do today to see your credit score improve.
1. Pay off your nuisance balances
What are nuisance balances? They’re small balances you carry. They could be a few hundred dollars, or just $30. The reality is that part of what makes up your credit score is the amount of your total balances, but another part is how many balances you have in total. Some people will charge a few hundred to one card, a few hundred to another, and on and on. This is actually worse than just charging $500 to a single card. As a result, a great way to get a quick score boost is to gather up your credit cards and pay off all those small balances.
2. Leave that good debt alone
It’s common for people to believe that old debt on their credit report is always bad. They’ll pay off their car or home, and will immediately try to get it taken off their report. The truth is that negative items are bad for your score, but good debt – that is, debt you’ve paid on time and have handled well – is great for your credit. The longer it stays on your report, the better it is for your score.
3. Pay your bills on time
This may seem obvious, but it bears repeating over and over again: pay your bills on time! There is nothing you can do to improve your credit faster than starting to pay your bills on time. What we see time and time again is clients who want to save up for a big purchase – for example, a down payment on a home – and they get so inflexible that if they can’t pay their bills and put the pre-determined amount of money in savings, they’ll skip the bills and stick with the savings. They’ll end up paying thousands of dollars more in interest if they let their credit score drop due to late payments.
4. Avoid showing risk
There are many actions you can take that may indicate risk to your creditors. It may mean taking out large cash advances from your credit cards or home equity lines of credit, or suddenly using credit when you didn’t in the past. These can be warning signs that show your creditors you’re in danger of defaulting. If you’re trying to improve your credit, avoid anything that may raise a red flag.
5. Work with the professionals
You can likely get your credit score up a few points in the next few months by following general tips and tricks. However, the best way to get super-fast results is to work with the professionals. Leaf Credit Solutions has the experience and expertise to create a plan for you that’s laser-focused on exactly what would help your situation. Contact us today to learn more.