A good credit rating makes life easier sometimes. It can make financial decisions less stressful than they would be with not-so-great credit, and it could mean access to more advantageous mortgages and loans, lower interest rates, lower premiums and, potentially, lower down payments.
That’s why it’s important to try to keep your credit history pristine if possible. But what if your credit has already been damaged and you want to start down the road to repair? Is there some way to fix or improve your credit rating?
There is, but it won’t happen overnight despite what some credit-repair companies claim. It takes patience and planning to make the biggest improvements. Still, there are immediate actions you can take to get the process started.
Establish a good payment history.
This may be the most obvious piece of advice, but it’s also the most important in terms of its influence on your credit score. Simply put, make a point of paying your credit card and loan payments on time. A single missed payment of more than 30 days can knock your score down significantly.
Prospective lenders want to see that you’re responsible and consistent before they lend you money. Even if all you can afford is the minimum monthly payment, that still counts in your favor. If you need to, put due date reminders on your calendar or set up automatic payments with your financial institution.
Pay down existing debt.
If you can afford more than minimum payments, make it a priority to reduce or eliminate any large outstanding balances. The less overall debt you carry, the less of a risk you’ll appear to creditors. Moving balances to a single card with a 0% APR balance transfer offer can allow you to consolidate debts and temporarily avoid interest. Just don’t get stuck paying significantly more interest when the promotional period ends. And put your original card (or cards) in a drawer!
Don’t apply for new credit unless absolutely necessary.
The more credit applications you submit or accounts you open, especially in a short period of time, the riskier you’ll seem. So, yes, apply for a balance-transfer card if you really need it, but don’t get carried away.