Do you have bad credit? If so, you may be denied loans or pay a higher interest rate than those with a better credit score. If you know you will soon need a loan or need to rent an apartment or buy a home, you can try these hacks that will erase bad credit. However, remember, the more time you have to repair your credit, the better the results.
Hacks that Will Erase Bad Credit Instantly
If you’re short on time, i.e., you only have a few months to improve your credit score, these two steps can help improve your credit score quickly.
Have Someone Add You to Their Credit Card
If you have a loved one who has excellent credit and you’re trustworthy, ask that person if they will consider adding you to their credit card. You don’t need to physically have the card or use it. You’re just asking to have your name added to the account.
In a relatively short amount of time, your credit score will improve thanks to that person’s high credit score, which will now help offset your negative credit score. (The person who added you to their card will not have any effects on their credit because of your bad credit score.)
Ask for an Increase in Your Credit Line
A portion of your credit score is determined by your debt to credit ratio. A debt to credit ratio below 10% is ideal. However, if you have bad credit, you likely have a much higher debt to credit ratio. One way to lower the percentage is to ask for an increase in your current credit line.
If you have $6,000 in credit card debt and $6,500 total in your credit line, you have a 92% debt to credit ratio, which will negatively affect your credit. If you call the credit company and the agent increases your credit line to $7,500, your debt to credit ratio will instantly be reduced to 80%. While this is still high, it’s better than what your debt to credit ratio was before. You should see your credit score improve.
Hacks that will Erase Bad Credit in Three to Six Months
In addition to the hacks that will erase bad credit instantly, take these steps to continue to improve your credit. These steps will take at least three to six months to improve your credit, but the impact can be dramatic.
Check Your Credit Report for Errors
Did you know that more than 1/3 of Americans have errors on their credit reports (CNBC)? A small error may not affect your credit score, but a larger error, like an error that shows an account open when you’ve already paid it off, may affect your credit score.
To determine if you have an error on your credit report, you can order your credit report for free from annualcreditreport.com. While this site used to only offer a free credit report once a year, during the pandemic, you can order one every week.
If you do find an error, you’ll need to write to both the company that issued the loan as well as the three credit bureaus. (Consumer Finance explains step by step how to do this.)
Don’t be surprised if you don’t get immediate results. You may need to follow up several times before the credit bureaus correct the error.
Pay Down Credit Cards Strategically
If you have extra money that you can apply to your balances, apply it strategically. Again, this comes down to the debt to credit ratio. Let’s say you have one credit card with a credit line of $4,000, and you owe $3,800. You have another credit card with a $5,000 credit line, but you only owe $2,000. The first card has 95% utilization, but the second card only has 40% utilization. In this case, you would want to pay the minimum on the second card and the extra on the first card so you can reduce your debt to credit ratio on that card.
Keep in mind, the debt to credit ratio is computed for each debt as well as your overall debt. Both can affect your credit score.
Pay Twice a Month
Another option is to pay your loan weekly or every two weeks instead of just once a month. If you have a $400 car loan and can arrange your budget to do it, try paying $100 every week. (Make sure that your loan provider doesn’t penalize you for paying this way.) When you pay weekly, you stop the interest from accruing as quickly, so more of your money goes to the principal, reducing the balance more quickly.
Open a New Line of Credit
As your credit improves, you may want to consider opening a new line of credit. Doing so will help you decrease your debt to credit ratio even faster. However, keep in mind that most credit companies will pull your credit report when you apply, which will count as a hard inquiry. Hard inquiries can temporarily lower your credit score by a few points. However, your credit score will rebound, especially if you are approved and can lower your debt to credit ratio.
Minimally Use Credit
While you’re trying to improve your credit score, minimally use your credit. For instance, if you have three credit cards and one of them is paid off, use that one a few times a month for basic expenses and then immediately pay it off. Do not use the other cards; focus on paying them down.
Using this strategy shows that you’re making a conscious effort to pay down your balances AND that you can now use credit responsibly.
There are no magic hacks that will erase bad credit instantly. However, you can take steps to improve your credit quickly such as asking for an increase in your credit line and becoming an authorized user on someone else’s credit card. After that, plan to spend the next three to six months actively working to improve your credit score. Many have lifted their credit scores from the low 500s to the 700s, and you can, too!
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York where she loves the natural beauty of the area.