[MD's note: For the next two weeks I'm going to be sharing pieces from my premium guide, Completely Conquer Credit. You can grab the pdf file for only $7 now for a limited time or you can pick up your copy on Amazon for Kindle if you enjoy the material.]
I’m here to help you build for your future and also to fix your past mistakes. We all mess up. We all also deserve a second chance. What would life be without second chances? Personal finance is all about improving your past mistakes. The best feature about your credit score is that it’s not a constant. You can fairly easily improve your credit.
I wanted to share four quick HIGHLY effective ways that you can improve your credit score if it sucks right now:
1. Pay down your debt.
The obvious solution to building your credit score is to get aggressive with paying down your debt. This topic is covered a million times on Studenomics and I’m assuming that your goal is to become debt free so I’ll just move on to the other tips for improving your credit score.
2. Fix errors on your credit report.
You need to check your credit report so that there are no mistakes on it. Human beings make mistakes. Some credit report errors are as minor as a typo. I’ve also heard of stories where one late payment is counted twice or where one type of loan is counted twice. If you notice any major or even minor errors you need to get them fixed immediately.
Where can I check my credit report? The best site to check is annualcreditreport.com. This website is approved by the U.S government. There are many other sites that try to rip you off. This is the most trusted source.
When you get access to your credit report you need to look over it meticulously to ensure that everything is correct. This is one of the most important documents and it needs to be treated as such.
When getting an issue resolved with your credit report I have one important piece of information for you. Instead of trying to get the credit bureau to fix the issue, it’s often recommended that you contact the source (usually bank) that made the error.
The reason for this is that the source reported the mistake in the first place. Since banks report their information to the bureau every 30 days, they’ll just report the same wrong information if you don’t get it corrected.
Deep thought: Do you know the difference between a credit score and a credit report? Your credit report is the actual data on your credit history. Your credit score is basically the conclusion of your credit report in the form of a number. This number is determined by some complex credit-scoring model. Oh and your credit report doesn’t include your score. I know this isn’t the greatest topic for a first date, but understanding this is very important.
3. Make your payments on time always!
You can’t dwell on the past because shit happens. Moving forward you need to do everything humanly possible to make your debt payments on time. You don’t want your score to be hurt any more than it already has been. If you want a good credit score number you know what you have to do. I’m not going to preach what you already know.
4. Get another loan (although very risky).
Sometimes the reason for your poor credit score could be the fact that you’re really young or just haven’t built up a long enough credit history. You could be doing everything right and the only thing holding you back is time. This is why the recommendation is to get another loan so that you can work on your credit score.
The major setback with another loan is obviously the fact that you could get yourself into unnecessary debt if you get out of control (we all get a little wild sometimes).
For what it’s worth (and to look smart) I wanted to share the types of loans that exist out there.
Two types of loans:
- Revolving. This is where you have a limit and will be allowed to borrow money as long as you don’t pass your limit.
- Installment. This is where you have a schedule to pay off your loan. You make payments until you’ve paid the money back.
Quick thought: Have you ever heard a friend justify a car loan as a way to build their credit history? I’ve heard this excuse far too many times. I really don’t want you guys to get yourself into debt just to “build credit.” My quick thought is to basically ask yourself when the time comes up if you’re really building credit or if you’re justifying acquiring debt?
That’s how you can improve your credit score. If you start taking action now, you’ll see some serious improvements in the near future. What are you waiting for?
Don’t forget to grab your copy of Completely Conquer Credit for only $7 and finally start to live life on your own terms.