Perhaps you're ready to apply for a mortgage loan or buy a car. Checking your credit report and score before applying for financing provides some indication of your approval odds. But what if your report and score reveal problems that can ruin your chances of an approval? Rather than accept credit problems, take steps to clean up your bad credit fast and get the financing you need.
Pay down accounts that have balances. You can quickly raise a bad credit score by paying down or eliminating your high credit card balances. What you owe on credit cards accounts for 30 percent of your credit score. Have self-control and do not exceed 30 percent of your credit limit. For example, the balance on a credit card with a $1,000 limit should not exceed $300.
Fix payment history. Being 30, 60 or 90 days late on payments hurts your score. Start anew and provide payments by the due date to increase your score and clean up bad credit. Use online services or telephone payment systems to avoid tardiness and late fees.
Limit inquiries. Diversifying and acquiring a mixture of accounts (credit cards, installment loans, car loan) helps your score. However, applying for many different accounts within a short time frame takes points off your score. Apply for credit only when necessary to avoid lowering your credit score.
Pay off old debts and have any derogatory information deleted. Getting remarks such as judgments, liens and collection accounts taken off your credit report can quickly increase a low score. Find old creditors and set up installment payments to pay off outstanding debts. Request removal of derogatory information after you've paid the balance.
Pay for rapid rescoring. After paying down account balances or detecting errors on your report, ask creditors to immediately update your credit file. This requires a $50 fee for each account that needs correction, and the lender must be a customer of a rapid rescoring service. If creditors agree to update your file, you can clean up your credit within 72 hours.
- Motley Fool: How Lenders Keep Score
- Federal Reserve: Improving Your Credit Score
- Bankrate: Bump Up Your Credit Score in a Hurry
- Fair Isaac Corporation. "What is a Credit Score?" Accessed Oct. 31, 2020.
- TransUnion. "How Long Does It Take for a Credit Report to Update?" Accessed Oct. 31, 2020.
- Fair Isaac Corporation. "How Credit Actions Impact FICO Scores." Accessed Oct. 31, 2020.
- Credit Sesame. "Free Credit Score." Accessed Oct. 31, 2020.
- Credit Karma. "How Credit Karma Works." Accessed Oct. 31, 2020.
- Credit Karma. "Credit Score Simulator." Accessed Oct. 31, 2020.
- Fair Isaac Corporation. "FICO Score—How It Works." Accessed Oct. 31, 2020.
- Experian. "What Is a Rapid Rescore? Is It Something I Should Consider?" Accessed Oct. 31, 2020.
- Fair Isaac Corporation. "Introducing UltraFICO Score." Accessed Oct. 31, 2020.
Valencia Higuera is a freelance writer from Chesapeake, Virginia. She has contributed content to print publications and online publications such as Sidestep.com, AOL Travel, Work.com and ABC Loan Guide. Higuera primarily works as a personal finance, travel and medical writer. She holds a Bachelor of Arts degree in English/journalism from Old Dominion University.