After two years of the global pandemic that was COVID-19, it may be hard to think about how to recover from everything, both financially and emotionally. At the time of writing this, we may be experiencing the coldest of the night before the rise of the dawn.
But the effects of COVID-19 will still linger around, especially on your credit report. The chaos from the past two years has changed everything, including the rise of job hopping and accumulating debt to pay for necessities to survive.
Now is the time to recover from detrimental use of credit cards and unstable financial situations. So what can you do to help improve your credit score and get back on track with a stable, fiscally responsible life? Here are a few tips to keep in mind.
Having a credit card or revolving account in good standing will put you in a favorable financial position on your credit report, but that’s only if the account in question has two things: no late payments and a high credit limit. Oftentimes, people forget that they can ask their credit card company or banks to increase their credit limit. Having an increased credit limit will broaden your spending capabilities and show that you’re a responsible borrower.
That’s because creditors give higher credit limits to people who pay their cards off on time, and future lenders will take note of this. When someone pulls up your credit report, they see that other creditors have trusted you with a large credit line, and thus, they feel more comfortable in giving you another line of credit.
Not only that, an increased credit limit means you have a lower percentage of debt in regards to your overall credit limit, which leads us to our next tip.
Even if you pay off your credit cards on time and are responsible over an extended period, your credit score will be affected by the debt-to-limit ratio. That means your score will lower when you go above a certain amount of your credit limit, which is 30%.
For example, Jimmy has a credit card with a limit of $10,000, but he owes a balance of $6,000. That means he’s using 60% of his card’s limit, which is considered high, and lowers Jimmy’s overall credit scores. However, if he can lower that balance to 30% or below ($3,000 in this example), his scores will improve. The problem with this solution is that the borrower will need to pay off the difference to lower the amount to 30% or below.
One solution to this problem (assuming you already have somewhat decent credit) is to open a new line of credit and do a balance transfer, making sure not to go over 30% with the new credit card. Many credit card companies will offer a new card with 0% APR for a set amount of time (usually 12 or 24 months), giving you plenty of time to pay off the balance without lowering your credit score.
The fastest way to get a good boost to your credit history is to become an authorized user on someone else’s credit card. Being an authorized user means that a credit card will appear on your credit report; thus, it can improve your credit score. This is especially true if the card has a long history, a high credit limit, and has no late payments on it. You should ask someone whom you trust like a close friend or family member if they will make you an authorized user on one of their cards.
Like when you go to a doctor for a check-up, the same must be done to your credit history, which is why it is important to take a look at your credit report. The first thing to note is that when you pull your own credit report, it will not hit you with a hard inquiry (which lowers your credit score).
You can always get a good credit report from a reputable credit monitoring agency such as Smart Credit or IdentityIQ. These two sites cost a premium, but they will provide you with an accurate report and scores. Free alternatives also exist as well, such as Credit Karma. However, sites like Credit Karma do not have access to all three credit bureaus (Transunion, Experian, and Equifax).
Free options don’t provide the most accurate information or scores, so be prepared to get what you paid for. However, you can always request a credit report directly from the credit bureaus themselves. In the United States, it’s required by law that the credit bureaus provide at least one free credit report a year upon request, so you may use that free credit report to get a good look at your history. Checking your credit history will give you insight into what’s affecting your credit score.
More importantly, it will show you any erroneous or false information that will negatively impact your credit score. If you see such information that you do not recognize, you can always try to dispute these items with the credit bureaus. Disputing derogatory information yourself is an option, but it can be tedious, time-consuming, and stressful at times. This is why the best way to fix your credit and improve your score is to find a reputable credit repair company.
A lot of times, going through a credit report and looking through the history can cause a bit of a brain freeze. There are a lot of creditors that may appear on your credit report that have odd names you don’t recognize, inquiries that you may not recognize, or even strange notes left by creditors that may affect your overall score.
At Get Good Credit, we offer credit repair services that will help get you financially back on track after the two years of hardship. Feel free to contact us at (877) 212-2450 as we serve customers throughout the United States.
If you have any questions, feel free to give us a call at 877-212-2450!
We also invite you to click on the following link to see our reviews on yelp.
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