Improving your Credit Score
When you have high credit score, you have a higher option on getting a loan
with the lowest interest on them. If you have low credit score, you have to put higher
down payment, and higher interest. Even if you already have good score, you can always
increase it to the highest, or prevent it from decreasing. I will be going over some ways
on increasing your score, these ways will not instantly boost your score, but with time,
you would get a higher score.
Your credit score is based mostly on (highest to lowest) Payment History,
Outstanding Debt, Credit History, and New Credit.
The first thing you should do is check your credit report for any errors, if any, you
should fix them. You also want to know what your score is from the agency, but
they do charge a small fee.
You should always pay your balance on time. Paying your payment on time is a
major factor for your score. Being a few days late will not lower your score, but it’s
when you’re late for more than two months.
Don’t open too many credit cards, if you don’t need it. Sometimes they offer free things,
if you open a credit card. You might get tempted to open one, but every time your report is
pulled up, you lose a few points. If you want to apply for some loans, do it all within two weeks,
this way all the credit lookup will be counted as one.
Don’t close your old account, as length of time is a factor for the credit bureau.
Keep your balance below 25% of your limit. High balance will impact your score, as it’s
seen as a high chance to default or having missing payment. If you over the 25% limit,
you can increase your limit by calling your credit card company and requesting a higher limit.
For example, if you owe $1000, and your limit is $2000 (that’s over to 25% ratio) you
increased your limit to $4000.
Some quick ways to increase your score, if you have no credit or low credit is to get a
loan and pay it off monthly, such as signature loans from your bank, personal loans, or auto
loan if you need to buy a car. You can do this, if you need to get a mortgage. As mortgage
companies want to know if you have ever gotten any loans and pay it off.
If you pay off the collection account, it will not be taken off your credit report, as it will be
on your report for seven years.
