4 Ways to Increase a Bad Credit Score

4 Ways to Increase a Bad Credit Score

After struggling for years with credit issues, you’ve put a plan in place to develop a budget, pay your debts on time, and spend wisely. You’re doing all you can and you’re ready for a fresh start, but your credit score is still not where you’d like it to be.

What now?

Here are a few tips for getting an added boost to your credit score.

1) Ask for an increase in your credit line. Your credit utilization ratio — the percentage of available credit you’re using — accounts for 30% of your FICO score. By increasing the amount of unused credit, you can raise your score. However, before you do this, ask whether the issuer will run a credit check. Note that if your credit-card issuer requires a credit check before granting an increase, you could possibly lower your score.

When a potential lender requests a credit report (due to you voluntarily applying for credit), this is considered a “hard” inquiry, and it might cause you to lose roughly five points from your FICO score. If you have a short credit history (few accounts) and several hard inquiries have been made over an extended period of time, you’re more likely to lose a few points. But if you have a long credit history, and relatively few hard inquiries, you may not be affected at all. A “soft” inquiry, which is when you pull your own credit report, does not affect your credit score.

2) Check your credit report. It’s been said over and over by financial experts, but it’s an important piece of advice that many people don’t follow. In a recent study, the Federal Trade Commission found that as many as 42 million Americans have errors in their credit reports. And some who had credit reporting errors corrected saw their score change by as much as 25 to 100 points. If you haven’t seen your credit report lately, go to annualcreditreport.com to get it right now — it’s free.

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Source: Black Enterprise | Sheiresa Ngo

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