How Can AI Help Increase Credit Scores? Top Ways
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Whether you are an entrepreneur or just managing your personal finance assets, you may at some point need to secure a loan or line of credit. However, if, like 16% of Americans, you have a bad credit score, you may not be able to access favorable terms or even qualify for credit at all.
The reasons behind your poor credit can vary from late payments to inaccurate reporting or fraud. Unfortunately, manually monitoring and resolving these issues can be quite challenging. That’s where Artificial Intelligence (AI) and Machine Learning (ML) are stepping in to make a difference. Now, you must be wondering how can AI help increase credit scores.
In this article, we are going to discuss the different ways AI improves and repairs your credit score and the best tools you can use for this. So, let’s start!
How Can AI Help Increase Credit Scores?
AI is quickly making its mark in every industry, and the financial industry is no exception. Here’s how can AI help increase credit scores:
Budgeting Strategies
One of the best ways AI helps you improve your credit score is by offering you practical budgeting strategies. How? Nowadays, there are many AI-powered apps that analyze your overall income, expenses, and spending habits to provide you with personalized budgeting options.
You get a visual representation in the form of charts and graphs so you know where your money is going and take steps to reduce unnecessary expenses and increase savings. For instance, Trim is a popular AI tool that connects to your bank account to track your spending and recurring charges.
It gives you suggestions on which subscriptions or expenses you can cut down to optimize your monthly budget. But that’s not all; Trim even negotiates better monetary terms for you from your internet or cable provider. When you are mindful of your budget and spend responsibly, your credit score will significantly improve.
Real-Time Credit Monitoring
Another way AI answers your question, “How can AI help increase credit score?” is through real-time credit monitoring capabilities. Nowadays, there are advanced tools that keep an eye on your credit score and send you notifications whenever there’s a change in your credit status.
You also get updates about the impact of different financial decisions on your credit utilization ratio and payment history. Typically, it’s recommended to maintain a credit utilization ratio of 30% or even lower to show that you are managing your credit well.
If you deviate from this margin, AI solutions will send you alerts so you can take immediate steps to improve your credit standing. For instance, if you make a large purchase, AI tools like Credit Karma can monitor your reports from Equifax and TransUnion and update you about major changes in your credit score.
Bill Payment Reminders
Do you know that payment history makes you around 35% of your credit score report? Yes, it’s true. So, to improve your credit score, you should make timely payments. However, we understand that tracking all bills and their due dates can be quite stressful.
To ease this worry, AI enters the picture! For instance, AI apps like Cleo retrieve information like when your paycheck or salary will come in and when bills go out.
Based on this data, they then schedule payment reminders so you pay all bills, whether they are electricity or gas, on time before your cash depletes. Know that by making timely payments, you reduce your debt, automatically increasing your credit score.
Nudging and Simulations
Being humans, it’s in our nature that we need a little nudging or encouragement sometimes to stay on track to achieve our goals. So, another answer to “How can AI help increase credit score?” is that it gives you gentle and some not-so-gentle nudges to make sure you are fulfilling all your financial goals.
For instance, if you have set your goals, such as maintaining your overall credit card balance at 25%, but you got distracted and dropped it by 5%, there are apps that give you immediate nudges. They have a “Hype” feature that showers you with words of motivation, so you make efforts to improve your credit score.
Another way AI helps you repair and increase your credit score is by offering a simulation of your financial decisions. For instance, it can show you how steps like taking out a new loan or closing an old account impact your credit score. Other than that, it can also simulate how the given things reflect on your finances so you can boost it before the situation goes out of hand:
- Starting a new family
- Buying a new house
- Paying off debts
- Getting married
Fraud Detection
Frauds, especially identity fraud, are quite common in the financial industry. Statistics reveal that 35% (banking and fintech) experienced 1000+ fraud attempts in the last year, while 1 in 10 experienced 10,000+ fraud attempts.
While fraud hurts businesses, it can also lower your credit score as an individual, as the criminal may open new lines of credit or make purchases, resulting in delayed payments. Gladly, another answer to “How can AI help increase credit score?” is that it detects fraud.
It does this by monitoring all your transactions and identifying anomalies like unauthorized purchases. You can then take immediate actions like disputing the transaction or freezing accounts so such activities don’t hit your credit status.
AI can also pinpoint inaccuracies and discrepancies in your credit reports to ensure you have a good credit score.
Best AI Tools to Improve or Repair Credit Score?
Now that you are aware of how can AI help increase credit score, you must be wondering about the tools that have AI capabilities to repair or improve your creditworthiness. If so, here are some popular options:
DisputeBee
The first credit repair tool we have on our list is DisputeBee, which suits the needs of both individuals and credit repair businesses. It generates and tracks dispute letters issued to different banks and credit bureaus for inaccuracies in credit reports. Overall, the software has a user-friendly interface along with some brilliant features like billing reminders, custom letter templates, e-contracts, and Zapier integration.
Key Features
- Easily imports reports from all three bureaus, Equifax, Experian, and TransUnion, to analyze them for inaccuracies and negative items.
- Professionally written dispute letter templates are available to send letters to bureaus, saving time and reducing errors.
- Disputes incorrect or unauthorized hard inquiries on your profile that may harm your credit score.
- For credit repair businesses, there’s a CRM system that helps manage client’s data, check their credit reports, and share tips on improving their credit score.
Pricing
Disputebee is priced at $49/month for individuals, and for businesses, it’s $129/month.
Credit Pillow
Another one of the tools that gets the limelight whenever someone asks, “How can AI help increase credit score?” is Credit Pillow. You can use this tool to update your credit reports monthly, file disputes in case of errors and inaccuracies, and manage everything that impacts your credit score via a client portal. The best part is that it’s user-friendly and quite cost-effective, so you can access it easily.
Key Features
- Get a quick overview of whether your credit score is improving or declining via an advanced AI credit monitoring function.
- Lets you file and customize dispute reports based on the type of error you or your clients are facing.
- Automatically flag errors in your report, making it easy for you to identify inaccuracies and send dispute letters.
- For businesses, there are dedicated client portals offering an overview of the client’s credit profiles, disputes, and overall progress.
- Training and knowledge sources are available to help you handle poor credit issues and achieve the 800+ credit mark.
Pricing
Gladly, Credit Pillow is free, but you need to pay a fee to access the credit monitoring feature.
AI Credit Repair
If you seek a highly reliable AI tool to learn “How can AI help increase credit score?” AI Credit Repair is the best. It’s legally backed, adding weightage to your dispute letters or complaints. Besides, it makes credit score management and bill payment less time-consuming and more efficient. There’s a free tier available, which means you can use this tool to boost your credit score for free.
Key Features
- Automatically creates dispute letters for errors and claims, backing them with proper laws and regulations.
- Keep an eye on your overall credit utilization ratio to ensure you maintain a good score and take advantage of different advantages.
- Send timely bill payment reminders via SMS so you stay at the top of all your dues and payments.
- A User-friendly interface makes navigation a sweet piece of cake for inexperienced users.
Pricing
You can get Lifetime Access to AI Credit Repair for $99 to access advanced features like unlimited credit cards and public property data removal; a free version is also available.
Dovly
If you are someone who’s just starting from scratch or need a boost after you have hit rock bottom in terms of your credit score, Dovly is an incredible solution. This AI tool is quite popular as it builds, fixes, and protects your credit so you can achieve financial independence. It has a Smart AI credit engine that optimizes dispute results and theft insurance to cover customers for their loss in case of fraud.
Key Features
- Allows unlimited disputes with all 3 credit bureaus: Equifax, TransUnion, and Experian.
- Enhanced credit monitoring and fraud detection give you real-time alerts for any unusual or fraudulent activity on your credit.
- Offers identity theft insurance coverage of $1M for clients’ peace of mind.
- Get personalized financial advice and actionable tips on how to improve credit scores.
Pricing
A free version is available, but if you want to access all advanced features, the premium plan starts from $39.99/month.
How to Find a Reliable Tool to Improve Your Credit Score?
After knowing how can AI help increase credit scores and the best tools you can use for it, here are a few tips that make it hassle-free for you to pick the right solution:
- Assess Your Goals: Firstly, start by assessing your goals; what do you want to achieve through the AI credit repair or improvement apps? Do you want to monitor your credit utilization? Or are you looking to file a dispute with a credit bureau for their inaccurate reporting? Once you get clarity, you can then find a credit repair app that caters to your needs and answers the question, “How can AI help increase credit scores?”
- Fraud Detection Features: Fraud can happen anytime, and to make sure you don’t fall victim to one, you should look for apps or software that have identity theft or other fraud detection features. This ensures that your cash flow stays intact and there’s no unexpected line of credit to hurt your credit score.
- Dispute Resolution Capabilities: The credit repair tool should have dispute resolution letter capabilities. For instance, the software should provide you with customizable letter templates so you can create letters based on your situation or error without wasting any time. It should also help you send requests, follow up, and get replies on time.
The AI credit repair tool must be easy to use and align with your budget so you can manage your finances and credit score without breaking the bank. However, if you just want to check your credit score, PFScores is a great solution!
FAQs
Typically, a bad or very poor credit score ranges from 300 to 579, while the fair is in the 580 to 669 range.
To improve your credit score, you should do these three things: pay all your bills on time, keep the credit utilization ratio 30% or below, and dispute inaccuracies timely.
Well, most AI credit repair tools are safe to use; however, you should still verify if the tool uses secure encryption and comply with data privacy regulations before subscribing.
Conclusion
So, how can AI help increase credit scores? AI tools are doing it by offering you advanced credit management and dispute resolution features. However, if you want a peek into your credit score and don’t know which platform you can trust, PFScores got you! It takes a 360-degree view of everything, including your savings, debt, and risk management. You get a personalized credit report showing where you lack and how you can improve your credit score.