How long does it take to increase a bad credit score?

Depending on how you go about it, raising your credit score can take as little as a few months or as long as a few years. Quick warning here, though: credit repair companies that promise to erase your credit history overnight are a scam. They can’t legally do something you can’t do yourself. It is not possible to erase your history, although it is possible to make improvements to it. Here’s what you can do for yourself:

Order your credit file

You are entitled to one free credit report per year from each of the “big three” credit reporting agencies – TransUnion, Equifax and Experian. It’s easy to request a copy of all three at once from a site like annualcreditreport.com.

Once you have received your three credit reports, review each with a fine-toothed comb to check for errors. Errors can be simple, like a misspelled name or wrong address. It can be serious, like listing a debt you don’t own or a balance you paid off years ago.

If you find any errors (no matter how small), report them to the credit bureau in question. Once you dispute an error, credit reporting agencies have 30 to 45 days to prove that the credit report is correct or to remove the error from your report. Even the smallest mistakes can lower your credit score, which means this simple gesture can give it a boost.

Build a credit history

A bad credit score isn’t always the result of not paying bills on time. Sometimes it’s a matter of not having a credit history. If you’re fresh out of school or recently immigrated to the United States, your credit history may be too thin for FICO® to guarantee you’re good at paying your bills.

Building a credit history can keep people from taking advantage of you and can be as simple as opening a store credit card and making all payments on time. You could also:

• Pull out a secure credit card to pay for everyday items, like groceries and gas.
• Ask someone with a high credit rating to co-sign a debt for you.
• Sign up for Experian Boost to have utility, telecom, and select streaming service payments reported to credit reporting agencies.

Pay off the debt

Remember that creditors want you to have access to credit without using much of it. Focus on any outstanding debts that you are late paying or have stopped paying and getting them paid off. While that might mean taking a part-time job, hosting a garage sale, or selling something of value, the long-term benefits of getting those debts off your credit report are worth it.

Paying off your debt does two things: it reduces the amount you owe (30% of your credit score) and it shows you’re serious about managing your financial obligations.

Consider a secured loan

There are two types of personal loans: secured loans and unsecured loans. Here’s the difference: With a secured loan, you’re putting something of value as collateral. With an unsecured loan, your signature is all that is required. The advantage of a secured personal loan is that you may qualify for a bad credit loan that would otherwise be out of reach. Moreover, the interest rate of a secured loan is lower than the rate of an unsecured personal loan. The downside is that missed payments give the personal lender the legal right to take possession of the collateral.

Consolidate debt

If you find yourself with high interest debt, consolidating it into one low interest personal loan may be the solution. Say you have five credit cards, each with a spending limit of $5,000. Let’s also imagine that each card is maxed out, which means you owe a total of $25,000. You make the minimum payment on each, but because of the interest rate, the balances don’t seem to go down.

Getting the best personal loan at a lower interest rate will not only save money in interest payments, but will also provide a date when the debt will be paid off. As long as you put those credit cards away and don’t use them while you pay off the consolidation loan, you’ll end up making money.

If qualifying for a bad credit personal loan helps you consolidate credit card debt, cover an emergency expense, or make your life easier, these lenders are definitely worth exploring.