How to improve your credit score.
Improving your credit score usually takes some time and effort before you could actually see some results. Credits cores may range from around 300 to 850. If you have a score of about 700 or higher, you have an increased chance of being granted a loan in case you request for one, but if your score is lower than 500, you’re likely to be turned down by lenders, and if you get some credit, interest rates may go up very high. Therefore, raising your credit score is a must to get good credit and nice interest rates.
The first thing that you should do is to be punctual in paying your bills. As simple as it may seem, many people still struggle to beat deadlines when it comes to paying bills. Lenders need to know whether you pay bills in a timely manner or not, which is why the 35 percent in your credit score comes from credit history. The newer the payment issues are, the more they pull down your credit scores. But by paying your bills promptly, you may just see some improvement in your score the next month.
It’s also healthier for your credit score if you maintain low credit card balances. Maxing out your cards may just reduce your score by up to 70 points. A good idea is to distribute your balance to your other credit cards that are far from being maxed out to keep your limits to around 25 percent.
It’s even better if you pay your debts to improve your credit score, but be sure not to close your old accounts, as it will only decrease your total allowable credit. By closing off past credit accounts, your credit history is shortened, which will reflect as a reduction in your score.
If you’re aiming to request for big loans, try establishing good credit history first by getting small loans. Without any credit score, lenders will find it hard to determine whether you are responsible and stable enough to pay your debts.
Shopping is a hard habit to break. However, in order to improve your credit score, you might have to limit your shopping in two-week gaps. In every loan request, your credit report is accessed by the lender, which automatically decreases your score by around 3 points. You should maintain loan processes in a certain period when you are seeking low interest rates for your loan. This will allow inquiries to your credit report to be accumulated and seen as a single request upon calculation of your score.
James is a financial blogger and journalist. He writes on all matters to do with personal finance and small business finance, from cutting your taxes through to investing in solar panels.