How to Improve your Credit Score – Knowing that your credit score is a big dominating factor that depicts your creditworthiness is crucial. Hence, for many lenders, the lower your credit score the lower your chance of getting a potential lender and vice versa. So, it is very vital that if you have poor or bad credit, you need work on improving your credit score. After several kinds of research, I have discovered proven ways that you can improve your credit score.
The higher your credit score, the facile you will get approved for new loans or credit products. Lenders, credit Unions, and Banks will approve the loan applications of individuals with a strong credit score as compared to people with poor credit scores. To learn about how to improve your credit score in less demanding ways, read this article to the end.
If you would love to revamp your credit score from a poor one to an excellent credit score, it is very possible. According to research, more than 48% need to improve their credit score. There are a number of simple principles that you can apply to improve it. However, it may take a while before you can see the results but you can start working towards having a better score today.
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Why do I Need to Improve my Credit Score?
Building or rebuilding your credit score is very necessary and second to none. Before lenders can trust you with funds, then they need to be sure of your creditworthiness. Below, are some of the reasons why you have to increase your credit score.
- Potential high chance of getting loans and credit products at a low-interest rate
- Find a mortgage with a great interest rate
- Have remarkable savings on interest rates on big-ticket loans
- You get better availability and terms on a loan credit product
- Access to great credit cards secured or unsecured
- Access to Insurance discounts
5 ways to Improve your Credit score
Hitting 100 points increase in your credit score is very realistic. According to Rod Griffin the senior director of public education and advocacy for credit bureau (Experian) “The lower a person’s score, the more likely they are to achieve a 100-point increase simply because there is much more upside, and small changes can result in greater score increases” Still, you will need to put in due diligence in order to see the results you are looking for.
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Make your Credit Card Payment on Time
This is the biggest factor to improve your credit score overnight. Your credit card payment history has the biggest influence on your score. Your payment history records if you have been making your bills payment on time or not. Also, if you have paid your debts responsibly and on time, the odds will be in your favor.
The three credit bureaus use your payment history to calculate your score. And if you have been paying your credit on time, your score will increase automatically. In fact, the impact of paying your bills is the largest factor in FICO and VantageScore scoring systems.
Pay your Credit balances strategically
The part of your credit limit you are using at any period of time is known as your credit utilization. And your credit utilization is the second biggest facet of your credit score. A great guideline to help you optimize your credit score quickly is; to use less than 30% of your credit limit on any card.
In fact, you can decide to use lesser because the lesser the better. Pay down the balance on your credit score; ensure that it is low before the card issuer reports to the three credit bureaus. Keep in mind that your credit card balance is what is used to calculate your credit score.
A good way to keep your balance low is to pay your credit bills many times before the billing cycle ends. Also, ensure to pay on time because it is the biggest factor to determine your creditworthiness.
Become an Authorized User
If you have a relative or friend who has a credit card account with a high credit limit and good payment history of on-time payments, you can ask them to add you as an authorized user. That becomes an addition for you, the accounts will be added to your credit reports, so the credit limit can help your utilization which is also called credit piggybacking.
The advantage of this impacting your credit score is potentially high especially if you are a credit newbie. The authorized user’s status permits you to benefit from the primary user’s good payment history. Moreover, they don’t have to give you the card or the card account number.
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Use a Secured Credit Card
Another proven way to increase your credit score to 800 is with a secured credit card because this type of card is financed with a cash deposit. In the meantime, you can pay the deposit upfront and the amount is usually the same as your credit limit.
When you pay your bills on time with your secured credit card, it helps build or rebuild your credit score. It is best for someone who is a newbie to credit or someone who wants to rebuild their credit score fast. You can apply for a secured credit card, pay your bills on time and keep your credit balance low to improve your credit score.
Keep Old Accounts Open and Deal with Delinquencies
The older your credit card accounts, the more approval you appear to lenders and they can see you as a trustworthy borrower. Hence, if you have old credit accounts that you are not using anymore keep them open, and don’t close them.
Although the credit history on these accounts would be in your credit reports. Also if you have an account with multiple delayed payments or missed payments resolve them as soon as possible. This won’t clear the late payment history, but it will help improve your credit score quickly.
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Frequently Asked Questions
What is a good credit score?
There are gobs of credit scoring models today, but the giant of all is the FICO scoring system. Tons of lenders, Credit Unions, Banks, and online loan websites commonly use the FICO score model. FICO credit score ranges from 300 and 850. Below is a breakdown of the FICO scoring model.
- High: 800 and above
- Very Good: 740-799
- Good: 670-739
- Poor: 579 and below
Generally, a credit score of 700 or above in the FICO scoring system is considered to be a good credit score by many lenders. So, it is best you increase your FICO score.
How fast can you raise your credit score?
Someone with a relatively low credit score is better stationed to quickly boost credit scores as compared to someone with a great credit history. Paying your credit card bills on time, keeping your credit card balance low, and using less than 30% of your credit limit can raise your credit score in 30 days.
How do I improve my credit score to 100 points in one month
If you are battling with a low credit score, you are better stationed to make gains than someone with a strong credit score. Depending on what is crushing your scores, you can raise your credit score by 100 points if you follow positive credits such as paying your bills on time and being an authorized user.
Can i improve my credit score with a credit card?
It depends on the type of credit card. Unsecured credit cards are the best cards to use if you want to develop an excellent credit history. Ensure to make your payments on time, keep your credit balance low each month, and utilize your credit card very well. These steps can help you raise your score.
Can I raise my credit score instantly?
Building your credit score is a bit-by-bit process. Your credit score does not improve instantly once you start working on it. But as month goes by, you will see a progressive impact on your score. You can raise your credit score fast.
Does Paying off collection improve my credit score?
A collection of debts will greatly impact your credit score and credit history. A collection is failing to pay your credit bills for a long time. Many people think that paying off a collection will improve their credit score but it is not entirely true. Even though paying your bills will help increase your creditworthiness, it will still be on your credit report.
How can I fix my Credit Score fast?
If you have bad credit, then you have to find ways to fix your credit score. Fixing or rebuilding your credit score is achievable. Be determined about raising your credit score, pay your bills on time, pay off debts, and keep your credit balance low.
What do I need to do to help My Credit Score from falling?
After raising your credit score, you need to keep your scores healthy so it does not fall again. First of all limit your credit applications and work on utilizing your credit account well.