How to improve your credit score quickly? what is a credit score? Credit scores are taking over the globe when it comes to making financial decisions and influencing purchasing. It has become a measure of your financial status in these current times. It is an indicator of how responsible you are, your monetary standing, basically how wisely you use your credit.
A credit score is a number between 300-850 that depicts how worthy a consumer is of credit. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors. Various credit reports are used to analyze an entity’s credit score. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.
Importance of a good credit score:
- It becomes easier to get a house. A good credit score will assure the mortgage lenders to take the risk of giving you the loan. Even with rents, credit scores can be used to decide whether or not to rent to you. Not just that, even for utility services you may require a decent credit score. It may come as a surprise that electricity, cable, phone and service providers all may run credit checks
You have a better chance at a decent auto loan. Many people apply for a loan to get a vehicle. It becomes imperative then that the credit score plays a role in whether you get qualified for the loan in the first place or not. Credit score also plays a role in the amount you can receive for the loan as well as the interest rate.
If you are planning your own business, you need to have good credit. Founding a startup requires a lot of money for which business loans are needed. To qualify as well as get the adequate loan amount, good credit is important.
Several companies have started running credit checks for employment. Employers check if you are financially too unstable especially jobs that are finance related or are management positions.
Basically, to live comfortably you must have a good credit score.
A credit score can significantly affect your financial life. It plays a key role in a lender’s decision to offer you credit as well as the numerical value of credit. Whenever you apply for credit, your credit score is perhaps the first thing which is checked by the credit issuer. If you’re looking to improve your credit score, here’s how you can do it in around a month:
1.Get copies of your credit report from all official and authorised credit bureaus.
2.Make sure your personal information is correct, including your address, employer, and phone number as well as other details required.
3.It is also important to pay heed to any late payments, collection accounts, or any other negative information that may be cast to points getting deducted from your score.
4.Know how often your credit score is updated – Most often the closing date (or the last day of the billing cycle) on your account is different from the “due date” on your statement. It’s better to keep track of how regularly your credit score changes. Especially if you have a lot of accounts with multiple creditors, you may want to keep tabs updated to get an updated score several times throughout the month. Some credit score factors have a bigger impact on your score than others and keeping regular tabs will help you make suitable changes to improve your credit score. Hence credit report monitoring becomes mandatory.
5.Identify what factors affect your credit score – It is imperative to understand which factors are affecting your credit score so that you can give preference to them when trying to improve your credit score. These factors include your payment, total amount owed, how long you’ve been using credit, as well as the average age of your credit accounts. Other factors can also be different types of credit on your credit reports as it shows a broader capability of managing your debts. It becomes important to determine how well you’re handling each of these factors and what can be done to make adjustments for the better.
6.Pay out your credit card dues.
7.Correct any errors mentioned on the credit report – If you spot any inaccuracies of reporting late payments or defaults, reach out and contact creditors and notify the bureaus.
8.To stay on track with creditors and preserve a credit score, make sure that you make every loan’s required payments on time.
9.Stay away from additional borrowing and minimise all card activities to increase your debt-to-income ratio.
10.Raise your card limits – This is not just to give yourself a way to overspend, but the main idea is to raise your credit limit on one or more cards so that your utilization ratio goes down. But then again, you must be sure your situation looks stable before you ask for an increase.
In conclusion one must remember that improving credit score is an ongoing process and continuous efforts must be taken to ensure the best results possible. The sooner you begin to work on improving your credit, the sooner you will see better results.