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8 Free Ways To Rebuild Your Credit Score
TayTalksMoney: Money, Lifestyle and Productivity

8 Free Ways To Rebuild Your Credit Score

8 ways to rebuild your credit score

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*This post may include affiliate links. We get a commission if you sign up with a partner; this commission is at no cost to you.

(Last Updated On: April 8, 2019)


genius tips for credit repairREBUILD YOUR CREDIT SCORE

Do you have a low credit score and want to fix it? If you’re new to credit, this may feel like a difficult task. You may not know where to start or what the right moves are to begin increasing your credit score.

The good news is that rebuilding your credit score revolves around things you can do yourself. In fact, most of what goes into rebuilding a successful credit score are things under your full control.

With that said, here are 8 amazing tips for rebuilding your credit score that doesn’t cost you any money.

1. Pay all of your loans and credit cards on time

The most important factor in determining what your credit score is your payment history. Your payment history accounts for roughly 35% of your score. Which also means the number 1 things you should do to focus on rebuilding your credit score is to pay your loans on time every single month!

You can set up automatic withdrawals from a bank account to pay loans and even credit cards. I think most people miss payments because they more or less can’t pay it rather than being lazy. Remember that paying the minimum is a lot better than not paying it at all. Some of the other tips I’ll share with you will help you solve the problem of not having enough time.

A lot of the tips you’ll see on this list will be directly tied to helping you pay your credit on line.

2. Make more money

If you had enough money to pay all your debts off every month, you would probably have great credit! The only reason you would have bad credit is if you were lazy about making payments.

The MOST important thing about building wealth, getting out of debt, and increasing your credit score is to make more money! Saving money can make a dramatic difference too… but saving money will only help you get so far. If you have a lot of debt or a lot of payments to make every month, the best remedy is to have the money you need to pay your debts. By paying your debts on time every month, you build yourself a solid credit score.

There are many ways to make more money. The most common way is to work an extra job. And that is a great idea because it’s guaranteed money for your time. However another way which I recommend you to do is to start a side hustle.

A side hustle is something you do on the side to make extra money. What I like to recommend people is to make money building a website around a topic they love. You can make money with your site by teaching people things, placing ads on your site, and recommending products and services.

To get an idea of what topics can work with a website, check out this blog post about hobby topics to build a website around.

3. Increase your credit limit

Did you know that having more credit can help increase your credit score? This is because a part of your credit score is based on your utilization rate.

Your utilization rate is how much of your available credit you have used. For example, if you have a credit card with a $10,000 limit and you have used $1000 of that limit, you’ve only used 10% of your limit – which means your utilization rate is 10%.

This is great for your credit score because you want to keep your utilization rate as low as possible. Ideally, 20% or lower, however I prefer 10% or lower for optimal results.

You can increase your credit score extremely fast by getting more credit. Call your credit card company and ask for a credit limit increase. That’s all you need to do. And it usually doesn’t require a credit check.

Just remember to be responsible with your credit. Just because you have room doesn’t mean you need to fill it all up!

4. Set up automatic withdrawal

I find even the most responsible people forget to make payments. We’re all busy right. I always set up automatic payments anytime I can because I know I forget sometimes too.

This is the easiest way to make sure you pay all your bills on time every month. Make sure you are set up for automatic payments whenever possible. You’ll want to contact the company to see if they offer this option.

You can make automatic withdrawals from a bank account or credit card. I prefer a credit card because I get points. However a few items comes out of my bank account as well because that was the only option.

Remember that your payment history is the most important aspect of your credit score. Any late payment for a loan will hurt your score.

5. Use all of your credit cards to boost your score

This is a great tip especially for younger people or people who are new to credit or anyone who wants to build or rebuild credit.

Your credit score takes into consideration the quantity of credit you have. For example, using 3 credit cards should have a more positive effect than using 1 credit card.

So you should do just that! Obtain a few credit cards and use them all every month. I recommend using one card as your primary card where you obtain points and use it for every day purchases. The other cards you can use just one (charge something small on it) and besides being a backup card, that’s all you’ll use them for.

This way, you will be building credit history with many cards rather than just one. This will build you a solid foundation of credit. This will make a big difference down the road too, and can boost your credit score in the short term as well.

6. Consolidate all your credit into one monthly payment

If you’re struggling to make payments (which lowers your score), then consider doing what is called consolidation. There are a few ways to do this, but the idea is to gather all of your debts (or the ones that make sense) and combine them into one loan. This way, you have ONE payment to pay every month which will make your life so much easier. You can also sometimes make your payments smaller too, which may give you relief in the short term if money is tight.

A few ways this is done is through a consolidation loan or through a balance transfer credit card. You can speak to a financial advisor to get more info about this as you may need someone to facilitate this for you.

7. Pull your credit report and check for correctness

Your credit report lists your history of credit usage. Your credit score is a number that is determined by your credit report (among other things). You must make sure your credit report is accurate because accurate information will reflect positively on your credit score.

If you have inaccurate information, for example, someone else’s delinquent credit card on your file, this will lower your credit score. If you don’t pull your credit report, you won’t even know this is happening!

Fortunately, your credit report is free! You get one free report every year. You can do this online with annualcreditreport.com.

If you do find an error on your credit report, use this guide to help you dispute the error.

8. Adopt a frugal lifestyle

My last tip is a big one. It’s about adopting a frugal lifestyle. What exactly does this mean? Frugal living is really a word that means “spending money wisely”. In a nutshell, frugality is all about putting your money towards things you value the most, and limiting your spending on everything else. If it’s not really necessary, don’t buy it!

You can probably see how this will help you in all areas of life. With regards to your credit score, you will know by now that missed payments is the biggest reason why people have poor credit scores. To rebuild your score, making payments on time should be your number 1 priority. When adopt a frugal lifestyle, you’ll no longer be spending money on whatever pleases you. And that means you’ll have more money left over to make your payments on time!

With that said, raising your credit score takes time. There are few quick fixes that can boost your score as soon as the next month, however you want to make sure you adopt good habits (like frugality) and build your credit score for the long run.

Remember that the better your credit score is, the more money you will save when you borrow money. This difference can save you thousands of dollars. And to be really honest, rebuilding credit is a mostly “free” thing. There are people you can pay money to help you, however the best way is to adopt good money habits that help your credit score, and stay consistent with that! Good luck.

About the author: Jason runs the lifestyle blog minthabits.com, where he focuses his content mostly on personal finance, and blogs about other fun topics like travel and health. Head over to his site to read more of his stuff!

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