It’s strange to think that that three main companies (Experian, TransUnion and Equifax) control your ability to get a personal loan for whatever you need. There are other credit reporting agencies like FICO, but in general, all of the major agencies will have a similar credit score for you, which impacts your entire life. 

In 2014, the average credit score in America was 693 — which is considered fair. However, 34.2 percent of Americans had “subprime” credit scores, meaning their credit score was poor or bad. In addition, about 14 percent of adults have no credit, which can be just as damaging as subprime credit. 

If you’re trying to apply for a personal loan, but your credit isn’t great, you may be denied the loan. Or, the personal loans you do qualify for may come at a high cost. The good news, there are quite a few ways you can easily improve your credit score — though the may sometimes take a while to come into effect.

If you’re considering applying for a personal loan, or you simply want to improve your credit score for other reasons, here are 5 painless ways to do so:

1. Consider Experian Boost
We’ve mentioned this before on other blogs, but it bears repeating: One of the easiest ways to improve your credit score is to sign up for Experian Boost. Experian Boost allows you to use your on-time utility payments to show that you meet your financial obligations on time — which is the main factor in your credit score.

Experian Boost is completely free and can give you an immediate improvement in your credit score. Generally, the improvement is around 15 points, but any credit bump is a good thing! It’s important to note that Experian Boost works by evaluating your bank account(s) to determine if your payments are on time. In addition, it doesn’t work with every bank and credit union quite yet.

2. Pay Your Outstanding Debts Down on Time
Whether you have an auto loan, a credit card or any other type of debt, you will have monthly payments set up. It’s important to make your payments on time, or at least within the established grace period if that’s provided by the lender. With on-time payments, you both reduce the amount of interest you accrue, and you also show creditors that you’re trustworthy.

If possible, pay more than the minimum amount. This will help you lower your average credit utilization ratio. Essentially, a good ratio is how much credit you’re currently utilizing (i.e. how much debt you have) vs. your credit limit. A good credit utilization ratio is no more than 30 percent. So if you have a total of $10,000 in total credit available to you, you should be using no more than $3,000.

3. Be Careful with Credit Cards
Credit cards are a fact of life, but if you’re like so many other people, they are just as much of a curse as they are a blessing. They can get you through tough times, but if you bite off more than you can chew, your credit score can take a big hit. In addition, if you apply for new credit cards, your score will take a hit with every application (these are called “hard inquiries”).

Be careful about applying for new lines of credit if you don’t need them. However, you should also be careful about closing credit cards you don’t use. When you close a credit card, you increase your credit utilization ratio. So as long as you don’t have an annual fee on the card, your best bet is to keep the credit line open (but don’t use it!).

4. Review Your Credit Reports for Inaccuracies
In general, you can get a free report from the three major credit agencies once a year. However, a few of these agencies offer programs that include credit reports whenever you need them. Your bank may offer continuous reports, and sites like Credit Karma is also a free resource for credit reports. 

No matter where you get your credit report, you need to review it carefully. It will break down everything that is helping or hurting your score. Be sure to look at every factor that has a negative impact on your credit score. It’s not uncommon for errors to appear in your report. The good news is, you can dispute any errors on the report. This might take a while, as credit agencies don’t really move quickly. But getting these errors resolved can go a long way in improving your score.

5. Sign Up for Credit Counseling Services
Before we start with this point, we need to put out a big disclaimer: Credit counseling is much different than credit repair services, which are often predatory. Credit repair services promise to help resolve issues on your credit report for a fee, but you can do most of these repairs on your own (see point 4). 

Credit counseling, on the other hand, is provided by certified financial non-profit organizations. Credit counseling works in a few different ways. Most commonly, the organization will work with your creditors on your behalf to negotiate a debt management plan. In addition, they’ll provide actual counseling so you learn about handling your debt in a smart way. In some states, you will need to pay a fee for counseling. But in other states, it’s completely free (except what you pay to your creditors under your debt management plan).

Remember that Improving Your Credit Takes Time
Yes, fixing errors on your credit report and using tools like Experian Boost can give you a quick increase in your credit score, it’s important to remember that really improving your credit will take time. It all comes down to paying your debts on time and avoiding new lines of credit when possible. Paying down your debts will take time, but stick with it!

As your credit improves, you may be able to consolidate your debt. While this is technically opening a new line of credit, it makes handling debt a lot easier. Basically, a financial institution pays off your debts for you, and in return, you pay that singular financial institution. Consolidating your debt may lead to a slight dip in your credit score to start with, but it should improve your score over the long term.

While you’re repairing your credit, applying for a personal loan may not be your best option. Consider other options you may have, such as getting a loan from a friend or selling things you don’t need. However, if a loan is your best or only option, we can help. At Your Own Funding, we offer personal loans to just about everyone. We will show you exactly how much you will owe over the life of the loan, and help you consider all of your options so you can avoid taking on more debt.

Apply for a personal loan today and discover how much you may be able to borrow, no matter the health of your credit.

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