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Unless you’re able to pay for all of your expenses with cash, your credit score will determine what type of loan and interest rate you will qualify for when it comes to your expenses. Your mortgage, car loans and credit cards are all determined by your credit score. The higher your score, the more likely the bank will be to trust you on repaying the loan. Your credit score can also affect your ability to get a job, find an apartment, or even get insurance. They are used more than most people realize.
If you’re in need of a loan from a bank and would like to ensure you get the best rate possible, there are ways in which you can raise your credit score rather quickly. Of course, the best way to maintain a high credit score is to pay all of your bills on time and have a low debt-to-income ratio at all times. Assuming you’re doing that and you have no huge red flags, such as a bankruptcy, here are five other ways in which you can increase your credit score in as little as just a few months.
Take an in-depth look at your credit reports
Pull your credit reports from the three national credit bureaus – Equifax, Experian and TransUnion. Make sure everything is accurate and if it’s not, get it taken care of immediately. Typically, accounts that are in collections remain on your credit report for seven years, so if it’s been longer than that and you still see those items being reported, make sure to call and have it removed. You can get your credit reports every year for free or you can just use a service like Credit Sesame .
Pay off as much debt as possible
If your credit cards are maxed out, paying them down can help raise your credit score quickly. While it may seem impossible to come up with the money, if you get creative, you will find ways. You can start a side hustle such as freelance writing, pet sitting or being a virtual assistant. You can sell items you no longer use on Craigslist. eBay, or Gazelle. You can also pick up
a part-time job or perhaps even borrow the money from a trusted friend or family member.
Related: How I paid off $20,000 worth of debt in less than two years
Have your credit limits increased
After you’ve paid down as much debt as possible, call your credit card companies and ask if they can raise your limit. This increases your total available credit and reduces the percentage of debt to available debt that you have, which looks good to lenders. A fair warning – do not increase your spending to go along with this higher credit limit.
Use your credit cards responsibly
It’s a catch-22, but in order to have good credit, you need to use your credit. Using your credit cards regularly and paying them off in full each and every month is a surefire way to boost your score. If you don’t like the idea of putting all of your monthly expenses on the credit card, perhaps you can put only your gas on the card. In addition to helping your credit score, using a credit card responsibly can also give you added bonuses such as rewards points, cash back or frequent flyer miles.
Ask to have items removed
Maybe you made a late payment on your mortgage two years ago or perhaps you stopped making payments on your MasterCard because your income went down last year. We’ve all had rough periods in our life and that doesn’t make you a bad person. Call the creditor and ask if there’s anything that can be done to have that “blip” removed from your report. You may have to pay the balance in full or write a letter explaining what happened, but if it works, your credit score will be instantly boosted and there is absolutely no harm in trying.
Once your credit score is where it needs to be, you have to continue working to maintain your high score. Keep your debt down, automate your payments so you won’t miss any and pay off your credit cards in full every month. Also, pull your credit report on a yearly basis (AnnualCreditReport.com does this for free) to check for any errors and dispute them immediately.