Credit score forms a significant part of your financial power as it determines your reliability towards repayment of loans. It is the crucial information that lenders look for in the Credit Information Report. A good credit score is crucial for achieving a lower interest rate, a better choice of lenders, and getting higher limits for credit cards. If you have a poor score, here are some tips to help reestablish it.

Review your credit score report
The credit score recovery process involves analyzing a person’s past decade’s credit history from the credit report. One can request a credit report from all three bureaus – TransUnion, Experian, and Equifax, as most lenders rely on the information provided by these bureaus. The credit report aids in calculating the credit score, so the steps to recovery should involve checking on these reports. Furthermore, the annual credit report will help determine any mistakes or incomplete information that negatively impacts your creditworthiness. However, one can submit a dispute to the bureau to remove these errors.

Clear your bills on time
The key to reestablishing your credit score involves payment of bills before it is due, as a large part of your credit score is established based on the payment history. Additionally, remittances made after the deadline remain on the credit report for over seven years. Therefore, the first step to recovery should be to make monthly payments of bills on time, and this can be done by using the automatic payment facility present in your bank account. However, it is necessary to maintain the required balance amount in the account to avoid overdraft fees. An overdraft fee is levied when withdrawal from your account surpasses the balance available, and the bank takes care of the transaction via an overdraft protection service.

Opt for a secured credit card
One should also remember to opt for secured credit cards from multiple banks and credit unions. These cards allow the user to buy things just like the traditional ones. However, it is considered secure because it is available only to users who pay the security deposit to open an account. The credit limit of the card is set based on the earnest payment.

Keep the credit utilization ratio below 30%
One must also remember to keep the credit utilization ratio under check. It represents the percentage of credit limit utilized by a person. Lenders use this ratio to analyze how well a person manages their finances. If the ratio stands below 30%, then it gives the impression that there is no overspending and the credit is being managed responsibly.

Establish yourself as an authorized user
If someone close to you has a good credit score, then it is a good idea to join them as an authorized user of their credit card account. It doesn’t cease the right to make purchases, but the primary account holder is responsible for making payments. And when the primary holder makes these payments on time, it aids in reestablishing your credit and improving your overall credit score. Furthermore, no credit checks are involved while applying to become an authorized user. This strategy is perfect for boosting credit scores but will work only when the primary account holder makes timely payments. If a payment delay happens for any reason, the drop in credit score will impact not only the primary account holder but also the authorized user. Therefore, before becoming an authorized user, ensure that the primary account holder doesn’t have a high credit utilization ratio and check if they make timely payments. Moreover, one must also get information from the card issuer about how they report authorized users to credit rating agencies.