Reaching financial success and security comes down to many factors. Income, savings, investments, and spending decisions play into the mix. But bad credit can get in the way of future opportunities. Achieving financial success with bad credit is possible but challenging. Banks, lenders, landlords, and employers see low credit scores as huge risks. Here’s how to fix bad credit fast so you can continue your personal finance journey!
Related: 15 Steps to Winning Financially!
What if you royally screw up your credit? Can you restart your credit score? Like, start it over?
No, you can’t restart your credit history. But with time, dedication, and the right tools, you can boost your score and remove negative reports that clean it up.
Is there a quick fix to credit history?
No. You can fix your credit history a bit faster by following the tips we list below, but it will still take time. On average, boosting your credit score will take at least three months and up to a year.
How long does it take to rebuild a 500 credit score?
This will depend on why your score is 500 and the steps you take to rebuild it. For example, collection accounts are harder to remove from your score but bring it down significantly. But a high-interest and maxed-out credit card may be easier to pay off and boost your score.
On average, it takes about a year to reach a 700-750 credit score (from scratch). While you may be able to do it much faster, a year is also fairly quick on its own.
Can I raise my credit score by 200 points in 30 days?
It’s highly improbable. Unless you get a negative mark removed or a collection account deleted, a 200-point raise is too high in most cases.
How much can a credit score go up in a month?
On average, your credit score can rise by around 50 points a month, depending on what you’re paying off and the type of credit you have.
Your credit isn’t “clear” after seven years, especially if you get more negative marks on it in that timeframe.
But most negative information stays on credit reports for just 7 years. Bankruptcy stays on your credit report for up to 10 years, depending on the bankruptcy type. And closed accounts can stay on your credit report for up to 10 years (unless you and the company agree to have them deleted).
After this time, those negative reports do tend to fall off your report, thus boosting your score.
Can I pay someone to fix my credit?
Just because you can, that doesn’t mean you should. It can seem like a good idea to just pay someone to deal with your score. But there is nothing that a “credit repair” company does that you can’t do yourself. And why would you want to put your credit score and personal information in the hands of a random company?
How To Fix Bad Credit Fast
Several credit hacks can help you fix bad credit fast. The following six are worth giving a try as soon as possible!
1) Use A Secured Credit Card
One of the easiest ways to boost credit is using credit cards for everyday expenses and paying the balance off at the end of the month. Unfortunately, those with bad credit will have difficulty getting approved for the typical credit card.
Luckily, there’s a solution in the form of secured credit cards used to build credit. These credit cards require a security deposit to open. That way, they don’t worry about losing money while you get to use your credit card to generate positive credit history.
2) Dispute Erroneous Credit Reports
When was the last time you looked at your credit report? Doing so is free and easy, so take a look as soon as possible. Examine the negative reports to spot any duplicates or inaccurate entries.
Gather up any evidence you can find that supports your argument and reach out to the three major credit reporting agencies with a detailed explanation backed up by proof.
You should also reach out to the company reporting the erroneous information. Clearing away errors on your credit report will lead to an almost instant boost in your credit score.
If you have bad credit, chances are you’re carrying around a lot of debt. The faster you pay it off, the quicker your credit will improve. But there’s a certain way of doing it that works best.
The bottom line is you should focus on the debt with the highest interest rate and pay it off before moving on to the rest. Known as the debt avalanche method, it helps you pay off debt faster by going after the high interest first, which speeds up your efforts to improve credit going forward.
4) Avoid Late Payments
In theory, this one is simple, but those with bad credit are probably guilty of making multiple late payments in the past. That ends now! Whether credit cards, car payments, rent, or utilities, on-time payments will almost certainly cause your credit score to go up within a matter of months.
If possible, set up auto payments so you never have to worry about remembering. If that’s not practical, set reminders on your phone. Do whatever it takes to make payments on time going forward.
5) Negotiate With Debt Collectors
Negative information on your credit report will continue to keep your score low until it’s resolved. If the information is accurate, reach out to the debt collector to negotiate a repayment arrangement.
While you don’t want to pay more than you owe, you also don’t want to offer a lower settlement amount since your credit score will drop. Instead, offer to pay the agreed-upon balance, either all at once or with a monthly repayment plan.
Your total credit utilization ratio refers to the amount of debt compared to the total credit available. Generally, you want to keep your credit utilization ratio below 40%.
For instance, if you have three credit cards with $2,000 of available credit each, you don’t want your debt to exceed $2,400 ($2,400 is 40% of $6,000.)
The lower your credit utilization, the better your score. So you want to focus on paying off as much debt as possible to lower this.
How To Fix Bad Credit Fast: Bottom Line
There’s a lot that goes into reaching financial success. However, good credit is probably the single greatest factor in achieving the best financial situation possible. It means lower interest, higher credit limits, better rewards, and streamlined access to loans and other forms of borrowing. So if your credit is lower than you want it to be, now is the time to fix it!
Looking to fix bad credit fast? Which of the above tips will you use?
AUTHOR Kimberly Studdard
Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.