If you need money but are suffering from less than perfect credit, you are probably looking for ways to improve credit quickly, maybe even how to clean your credit in 60 days or less.
CreditNinja has your back with all the financial information you need on cleaning up your credit score and how to maintain a healthy credit history!
How Long Does It Take To Clean up Credit Scores?
The length of time it takes to clean up your credit report depends on the factors you want to improve. For example, it will take longer to clean up foreclosure or bankruptcy than it would to clean up one late payment on instant online payday loans. Below is a list of common financial setbacks and how long they may affect your credit reports.
- Late payment of 30 days or more — nine months to three years.
- Late payment of 90 days or more — nine months to seven years.
- Foreclosure — three years to seven years.
- Bankruptcy — five years to ten years.
Tips for Cleaning Your Credit in 60 Days
While it may take a few months to transform your credit completely, there are things you can do to improve your credit score in 60 days. Check out the tips below to start the process!
Get a Secured Credit Card
Secured accounts can be a helpful tool for people looking to boost credit. A secured account works like a regular bank account or credit card; only the account holder pays a security deposit upfront. This security deposit then acts as a credit limit for the secured account holder to use as they see fit.
Secured accounts help ensure you won’t accidentally overspend or accumulate a massive amount of credit card debt. Furthermore, since there is a prepaid credit limit on secured cards and secured accounts, you won’t have to worry about making monthly payments.
Become an Authorized User
You may also become an authorized user on a loan or credit card. When you are an authorized user, you can benefit from timely payments and credit limits without the full responsibility of being an account holder.
If you want to become an authorized user on an account, try to work with a trusted friend or family member who already has a generally positive credit history. You may be able to get linked with an account that has a higher credit limit than you would be able to get on your own!
Prioritize Paying Off Outstanding Debt
Accumulating debt can be devastating to the health of one’s credit. To clean up your credit reports, you want to ensure you are prioritizing your debt.
Debt Payment Methods
Two popular debt management methods are the debt snowball and debt avalanche methods. To pay off debt using the debt snowball method, you first start by paying off small debts. Start with small bills or past due/missed payments, and work your way up to more considerable expenses like major loans and credit card balances. Use the momentum you build by paying off more minor expenses as motivation to work towards paying off those larger debts!
To pay off debt using the debt avalanche method, you do the opposite of the snowball method and start by paying off large debts first. Pick the debts that have the largest balances or that charge the most interest and pay those off first. Then work your way down to more minor debts and expenses. After paying off the large debts first, paying off the rest will become easier and easier as you work your way down.
You can also make paying off debt easier by signing up for automatic payments, also known as auto-pay. With auto-pay, you don’t have to worry about remembering to make payments on your own; it will be done automatically!
Dispute Credit Report Errors
One way to improve credit is to correct any errors on your credit report. Review your current credit report and take a look at the negative items. Make sure everything is accurate. If something seems off, contact the financial institution with the error or talk to a credit reporting company. You may be able to boost your credit score just by correcting the negative information!
Ask For Higher Credit Limits
It may also be a good idea to talk to any credit card issuers you may be working with and request a higher credit limit. That way, you can boost your available credit without applying for a loan or credit card and accumulate another hard credit check.
Keep Your Credit Utilization Ratio at Around 30%
Your credit utilization is how much you have in available credit compared to how much you are currently using. For your credit to benefit the most, try to keep your credit utilization as low as possible. While it may not be realistic always to keep your credit utilization at 0%, you want to try to keep it at around 30% or lower.
Benefits of Having a Clean Credit Report
Why is having good credit important? To start, having a higher credit score can come with benefits like:
- More loan options.
- Increase funding amounts
- Competitive interest rates.
- Easier time finding housing.
- Ideal insurance rates.
More Financial Options
Lenders view you as a financially responsible borrower when you have a good credit score. Therefore you may be able to receive approval on loans you may have been rejected for in the past when you had poor credit. For example, once your credit score goes up a bit, you may be able to get approval for loans with traditional lenders like a bank.
Higher Loan Amounts
Along with approval on a broader range of financial products, you may also have an easier time being funded for higher loan amounts when you have a higher credit score. When you are financially stable, lenders take less of a financial risk by extending funding to you, so they are usually willing to lend more.
Lower Interest Rates
Another perk of good credit is receiving lower interest rates. While low rates are not guaranteed when you have good credit, they are certainly more likely.
Approval on Rent or Mortgages
When you rent or buy a home, you must first fill out an application. Property owners will then look at that application and decide if they want to work with you or not. If you have poor credit, property owners may see you as a risk of Foreclosure and refuse to rent or sell to you. But when you have a higher score, you may receive instant approval on housing applications!
Better Insurance Rates
If you have a car, it is the law that you also have insurance. Insurance providers are more likely to approve you for low rates if your credit shows that you have been financially responsible.
What Goes on Credit Reports?
How does calculating credit scores work? Your credit score is calculated using a combination of data from your:
- Payment history — how regular you are with making on-time payments.
- Credit mix — the different types of credit accounts you have.
- Debt-to-income ratio — how much money you make compared to how much you owe in debts.
- Recent credit inquiries — how many hard credit checks you have accumulated recently.
- Length of credit history — how many years you have been using financial accounts.
While all of these financial categories are important, payment history is the most significant. Accounting for 35% of your credit score, how on time you are with making payments can greatly impact your credit. To avoid having a missed payment on your credit report, try these tips:
- Sign up for autopay.
- Set up payment reminders, so you never miss a due date.
- Create a budget and set aside money every paycheck to pay bills and expenses.
How To Get a Copy of Your Credit Report From Credit Bureaus
People are entitled to one free credit report a year from each of the major credit reporting bureaus. The three major credit bureaus are:
Since there is more than one credit reporting agency, you have access to up to three official free credit reports per year. You can also access an unofficial credit report at any time from most banks or credit card issuers. While these reports are technically unofficial, they still report much of the same information that you would find on your official fico score report.
Beware of Credit Repair Scams
Working with credit repair companies can be a great first step in improving a bad credit score.
To get started, these companies typically ask for a bit of information about your financial situation and habits so they can get an idea of your unique needs. From there, a financial advisor can give you personalized tips and plans of action for boosting your credit.
While credit repair companies can be extremely helpful, it is important to be watchful for scammers. If a place claiming to be a credit repair company or credit bureau asks for your social security number or payment upfront, cease contact immediately. You may be at risk for:
- Stolen social security numbers.
- Credit identity theft.
- Credit card theft.
- Other forms of financial theft.
If you decide to work with a credit repair company, make sure they are legitimate by researching, looking at reviews, and comparing multiple agencies.