Rebuilding your credit score after bankruptcy (or any other event that drops it) is a lengthy process that requires both diligence and patience. There is no overnight cure for a poor credit score, but there are things you can do that will get you on the path to better credit right away. Here’s a look at three things you should do to raise your score by 100 points – and a couple things you shouldn't do, which can cause your score to drop.
Fix Errors: Raise Your Score
One of the very first things to do when trying to improve your credit score is to make sure your credit report is accurate. Cleaning up errors can raise your score by as much as 100 points, depending on the number of errors you find and the manner in which they’re weighing you down. Getting a collections item removed or a late payment cleared up can boost your score significantly.
Pay Bills Late: Drop Your Score
Paying a credit card bill, auto loan, or mortgage payment late can drop your score by 100 points the moment the late payment hits your credit report. Paying bills that report to credit agencies on time each and every month is critically important to protecting your credit score. Your credit score reflects your financial behavior, so on-time payments affect it significantly.
Get a New Card: Raise Your Score
Adding new credit to your credit report will cause an initial dip but will help your score in the long run – so long as the payments are made on time and in the amount required (but preferably more than the minimum) every month. Adding too many accounts too fast can also cause a dip, but adding new accounts periodically and being responsible with them is a recommended method of raising your score.
Max Your Cards: Drop Your Score
Maxing out your plastic will tank your score. Some financial sites will tell you that it's okay to keep a small balance on your card as long as you don’t go above 30% utilization but even that isn't ideal. Your best bet is to use your cards each month and pay them off in full prior to the due date (or even make two payments a month). This ensures you don't accidentally max yourself out and can also shield you from a credit score drop due to overutilization.
Become an Authorized User: Raise Your Score
If you can’t get any more credit cards right now – or don’t want to – another way to boost your score is to have someone add you to one of their accounts as an “authorized user.” This could be a spouse, parent or friend. If you want to assure them that you won’t run up debt on the account, just hand them back the credit card once it is issued in your name. This prevents you from actually using it but still allows you to benefit from it.
It’s Easy to Tank Your Score – Harder to Rebuild It
Dealing with your credit score is like the old saying: “an ounce of prevention is worth a pound of cure.” Develop good habits so you don’t make late payments, or max your cards or go over your limits. This way, you won't have to dig yourself out of a hole. If you do have to pay a bill late, consider making it one that doesn’t report to a credit agency – but it's best to just always pay on time!
To find out more about how to improve your credit score after your North Carolina bankruptcy, contact Credit Score Keys. Let us help you make the most of the fresh start that bankruptcy offers.