Rebuilding your credit after a disaster can be a long process, but there are a few steps you can take to help increase your score within a couple months. Pay Off Your Credit Cards And Lines Of Credit –
This is one of the fastest ways to increase your score and it will also lower your debt utilization ratio, the difference between how much credit you’re using and the credit limits. Paying off debt with another loan would show up on your credit report and could do more damage than good, even if it is for a lower interest rate. It is best to just pay it down using your income, savings, or selling some of your stuff for extra cash. A riskier approach that may not be for everyone is a 401(k) loan which won’t show up on your credit report, but if you happen to lose your job, you will have to pay the money back fast or you’ll incur taxes and penalties on the balance. If you do take a 401(k) loan, make sure you’re able to repay it quickly. You shouldn’t cash out a 401(k) or other retirement account to pay off credit card debt. Sacrificing retirement income isn’t worth a few points on your credit score. Use Credit Cards Lightly –
Instead of using credit cards to pay for anything, only use cash. You might have to make some sacrifices by not being able to buy as much, but remember that the scoring formula looks at the gap between how much credit you are using and what the limits are. Focus On Correcting The Big Mistakes On Your Credit Reports –
If someone else’s negative marks are showing up in your report, getting them removed would be beneficial. You also shouldn’t ignore any collection amount just because it is small or listed as paid off. Use The Bureaus’ Online Dispute Process –
Some people have said that they get quicker results this way, but make sure you still get printouts of everything you are doing. Try To Get Creditors To Report Positive Accounts –
Some creditors don’t report to the bureaus on a regular basis or even at all. If you have an account that is in good standing, see if you can get them to report it.