Rebuilding a falling credit score or attempting to boost your credit ahead of a major purchase, such as a home or automobile, is important. The good news is with attention, focus, and discipline, it can be done. Unfortunately, it’s not usually a lightning fast process. Boosting your credit score will take some time – generally it can take at least six months for small bumps up, and even longer for large increases.
Negative items on your report such as delinquencies and collections take seven years to remove from your report. Tax liens and bankruptcy, on the other hand can take anywhere from 10 to 15 years to eliminate. Even credit inquiries when you’re shopping around for loans will remain on your credit report for up to two years.
Fortunately, there are practical ways for you to boost your credit even if you have a history of delinquencies, tax liens, or even a bankruptcy.
Pay Your Bills on Time
This may be the single most important thing you do to boost your credit score. Daily Finance reports that timely payments accounts for as much as 35 percent of your total credit score.
Make it a priority even if it means setting up payment reminders.
Pay Down Revolving Credit Balances
Another positive thing to do for the sake of your credit score is to pay down credit card balances to 10 percent or less of the total credit available to you. This lets creditors know that you’re not spending recklessly and that you’re able to manage your debt.
Eliminate Small Credit Card Balances
If you don’t need to spend money on six credit cards it’s better to pay off the remaining balances and stick to one or two primary credit cards for purchases. Keep the other accounts, but operate without a balance on the cards.
Maintain Aged Accounts with a Good Payment History
If you’ve paid off the balance and have a good credit history with the card or loan, it’s wise to keep this on your record as a indication of positive credit behavior.
Stay Below Credit Limits
The combination of paying your bills on time and staying below your credit limit can account for more than 50 percent of your credit score, so it is wise to reduce your spending below your credit limits to boost your credit score.
Correct Clerical Errors
Request a copy of your credit report and inspect it closely for errors. This includes the reporting of your credit card limits, as an understated limit here can impact your credit score negatively.
The Federal Trade Commission offers advice on correcting credit report errors in their Disputing Errors on Credit Reports brochure.
Boosting your credit score, even a little, can help you get lower interest rates on future loan.
This is particularly beneficial for big-ticket items like homes. These small steps will help you do just that.