TAKE THESE STEPS TO RAISE YOUR CREDIT SCORE FAST

You might not realize it, but your three-digit credit score impacts virtually every aspect of your life. The lower your credit score, the higher the interest rate will be on your auto loan and home mortgage. If your score is too low, you may not qualify for a loan at all.

Those financial impacts may be obvious, but there are other, less obvious repercussions from having a low credit score. A low credit score could raise your car insurance premiums, since many insurers factor creditworthiness into their underwriting process. You could even lose out on your dream job due to a low credit score, since some top employers consider credit scores in their hiring decisions. Landlords and utility companies may also run credit checks, making it harder to rent an apartment or require a deposit on your electricity account.

That’s why knowing your credit score is so important, but just knowing that score is only the beginning. If your credit score is lower than it should be, it’s time to take action. Here are some immediate steps you should take to raise your credit score and improve your financial standing.

Search for Errors

If your credit score is low that low score may not be your fault. Errors on credit reports are more common than you might think, and those mistakes could send your score into a tailspin.

Something as simple as a transposed Social Security number or a misreported late payment could cause your score to plummet, so check for these obvious errors before you do anything else. If you do spot any mistakes, report them to the reporting agency immediately, then follow up to make sure those errors have been corrected. For more information on obtaining free copies of your credit report and reporting errors visit www.consumer.ftc.gov.

Pay Down Your Debt

Paying down your debt is the most effective way to raise your credit score, and this should be the focus of your attention. Start by adding up everything you owe, then make a plan to pay down your debt as quickly as possible.

You can use whatever debt payment strategy works best for you. The most important thing is to follow a strategy you will stick to for the long run. Some people are more comfortable paying off their smallest debts first, while others focus on getting rid of the debt with the highest interest rate. No matter which path you follow, be vigilant about making your payments on time.

Keep an Eye on Your Credit Utilization Ratio

Your credit utilization ratio is one of the most important factors in determining your credit score. Vice President of Communications for the National Foundation for Credit Counseling, Bruce McClary, defines the credit utilization ratio as “the combined balance of how much you owe on your credit cards compared to the total amount of credit you still have available. Your credit score takes into consideration both the individual credit utilization of each card and your overall utilization ratio.”

Many experts recommend keeping your ratio at or below 30% for your combined balance and for each card. McClary, however, recommends keeping your ratio at or below 25%. Consumers with the best credit scores tend to keep their ratio at or below 10%.

To improve your credit utilization ratio, you can call your card provider and ask for a credit limit increase without a “hard” credit inquiry (the hard inquiry can cause a small negative hit to your score). Paying down your debt obviously improves your ratio, especially when you start by paying down the card with the highest ratio.

Finally, keep your ratio in check by making bi-monthly payments. Even if you pay off your balance at the end of the billing cycle, if you’ve surpassed the 30% mark during the billing period, it can hurt your credit score because your credit utilization ratio is calculated throughout the month.

Put Your Payments on Autopilot

Missing a single payment could undo all your hard work, so you need to make sure you pay your bills on time and in full. If you want to avoid the dreaded late payment, putting your bills on autopay is a good way to start.

Automating your payments can help boost your credit score while avoiding harmful setbacks. Make sure to monitor your bank balances carefully to ensure there’s enough in your account to cover your payments. The last thing you want to do is add an overdraft penalty to your already damaged credit score.

From your ability to get a mortgage to your chances at landing a great job, your credit score affects more than you might think. If your credit score could use improvement, it’s time to take action. Following the steps listed above can help your credit score recover, so you can get on with the rest of your financial life.