By Jasmine Browley ·Updated January 19, 2023
If you’re looking to improve your credit, join the club.
Credit repair statistics indicate that most consumers (44.6%) reach out to credit repair companies with a credit score between 300 and 579.
Boosting your credit score can take you down a long and winding road. Especially if your history is riddled with bad marks. Often, results from credit repair efforts can take months to show up, and rebuilding a solid credit history could be a years-long process. On average, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use.
Fortunately, there are some key hacks that can help you crack the code to achieve great credit.
Triaging is key
In hospitals, ER staff usually use the term “triage” to refer to their patient prioritization process when resources are limited.
“Step one in every credit rehabilitation journey would be the triage process,” said John Ulzheimer, veteran credit specialist in a CNBC interview. “That’s what I’d do first.”
What that looks like is determining what is most adversely affecting your credit score. “This is important because there are different paths to a lower score and, as such, there are different paths to improving your credit,” he told the outlet.
Securing a free copy of your credit report from the three major bureaus–Experian, Equifax and TransUnion–is a great place to start assessing what’s stopping you from achieving an 800+ score. Having your collective activity in one place is a great way to gauge how you’re doing with the key determinants of credit health: Payment history, amounts owed, length of credit history, new credit inquiries and credit mix.
Write a goodwill adjustment letter to creditors If you have the time, writing what is called a goodwill adjustment letter is a great way to help boost your score. It’s essentially a note to attempt to remove a slip-up on your account, like one missed payment, from a credit report. Missing a payment devastate a credit score, but if you’ve proven to have a good payment track record, the mistake can be removed. Here’s an example of what the letter can look like according to Lending Tree:
[Your name and address][Your phone number][Your account number][Today’s date]To whom it may concern,
My name is [Your Name], and I first want to thank you for taking the time to read this letter. I’ve had a great experience with [Mortgage Lender/Servicer Name], and my goal is to maintain the relationship we’ve built over the last [Number] years.
I recently pulled my [Credit Bureau Name] credit report and discovered I have a late payment that was reported on [Date] for my [Account Type/Name] account [Account Number]. During that time, I had a medical emergency that required me to drain my savings and use most of my paycheck to cover, which impeded my ability to make an on-time mortgage payment that month.I realize I made a mistake in falling behind and take full responsibility for my actions.
I understand that late payments cause inconveniences for your operation.Up until my recent medical emergency, I had an on-time payment history with you since my loan was first originated. Additionally, I’ve resumed making on-time payments in the months since that point, even enrolling in automatic payments to ensure I don’t miss any due dates in the future.
Based on my otherwise spotless payment history, I would like to request that you apply a goodwill adjustment to remove the late payment mark from my credit report. Granting this request will help me improve my overall credit history and demonstrate my consistency as a creditworthy borrower.
Thank you in advance for your consideration,[Your Signature Here][Your Name]
Prioritize paying your high-balance credit cards
One of the most powerful tools in your credit-building arsenal is paying off credit cards. Individual credit utilization ratios on revolving accounts are incredibly important when configuring credit scores and lingering card balances can cause damage.
If you have multiple cards, focus on paying the high-balance accounts off first. According to WalletHub, the best time to pay a credit card bill is a few days before the due date, which is listed on the monthly statement. If you can’t pay a substantial amount, aim to pay at least the minimum amount required by the due to stay in good standing. Also, autopay is your friend…a bestie even.
Set your payments to reflect a $0 balance at the time of your statement dateSpeaking of the importance of strategically timing payments, low credit utilization is one of the quickest ways to add positive points to your score. One tip to consider is timing your payments so you can have a low balance (or no balance) when your information is reported to credit bureaus monthly.
An easy way to do this is by downloading the corresponding apps for the financial institutions your credit cards are with, and setting autopayments to correspond at least a week before your statement date. This is different than your due date.
Negotiate a lower credit card interest rate
Although interest rates are usually auto-set when you are initially approved, over time you can reach out to the financial institution to negotiate them down. Take some time to do some research on interest rates from competitor and ask if the issuer will match the lower number. Also, point out positive payment history and advocate for why you think the rate should be lowered.
Here’s a short script on how the call can go:
YOU: Hello, I’d like to lower the APR on my credit card, please.
CREDIT CARD REP: Umm…why?
YOU: I’ve been a loyal customer to you for X years. Also, I’ve paid my bill in full and on time for the past few months. I know a few other credit cards offering better rates than what I’m getting right now, and I’d hate for this interest rate to drive me away from your service. Is there anything available to help with this?
CREDIT CARD REP: Hmm. Let me check…Ms. Browley, I just discovered that I can lower your rate from 15% to 12%. Will this work?
Hopefully, these hacks will help you conquer your credit-building journey this year, and help you empower your financial future.
The post 5 Hacks For Instantly Boosting Your Credit Score appeared first on Essence.
