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One of the essential prerequisites of financial health is the credit score. Almost every lender checks your credit score before granting you the loan. It gives them an idea of how responsible you are or will be responsible for the money they lend you. Naturally, the better your credit score is the higher your chances of getting approved for a better credit line or new loan. A good credit score can also increase your chances of getting a loan at a low-interest rate. However, not everyone will have a good credit score, but that does not mean that you cannot improve it. There are more than a few ways to improve your credit score. We will discuss a few of them here.
Take a closer look at your credit report
The first step in improving your credit score is merely reviewing your credit report. It is your credit report where you can see your credit history. You can get a copy of your credit report from any of the top credit reporting agencies – Experian, Equifax, and TransUnion. Every once a year to get access to your credit report, you do not need to pay anything. Just visit the AnnualCreditReport.com website, and you can fetch your report from there. Once you get access to your report, you need to see what’s been hurting or potentially ruining your credit score.
Primarily, the factors that impact your credit score include – payment history, credit mix, balances on the credit card, age of credit, and the number of inquiries made. See if what’s stated is right. If not, get it rectified, and it will improve your score. Grace, an associate offering buy assignment online services online, says that last year when she reviewed her credit report, she found two errors there, and on getting them rectified, her credit score was in the good range.
The FICO credit score, which is used by over 90% of all lenders to determine your credit score, comprises five key factors – history of payment – 35 percent, credit usage – 30 percent, age of credit – 15 percent, credit mix – 10 percent, and credit inquiries – 10%.
Now, you can clearly see how big an impact your payment history has on your credit score. Thus, it is best to have your payments made timely. Whenever you pay your debt responsibly and in time, things will work in your favor.
Thus, the easiest way you can do is by making all your payments in time. A good option will be to charge your bill payments on your card.
Keep your credit utilization rate at lower than 30%
Your credit utilization is the quantum of credit limit that you have at any given time. It is the second most vital step after payment history. One of the easiest ways to keep your credit utilization rate in check is by ensuring that your credit card balance is cleared in full every month. If not, you must, at all times, try to keep the balances lower than 30% of your assigned credit limit. Once you reach that, you can try going lower than that to better your credit score. Stuard, an educator who offers database homework help, says that he got his credit limit raised to improve his overall credit utilization rate below 30%. Well, that is certainly one right way to do it.
Curtail your new inquiries
Primarily there are two types of credit inquiries – the soft inquiry and the hard inquiry. A soft inquiry is when you check your credit, when a financial institution checks your score, the potential employer checks the score, or when the credit card companies check the score. All of these will not do any harm to your credit score.
On the other hand, hard inquiries will affect your score. These are when you apply for a new card, an auto loan, a mortgage, or any other form of loan or credit. Your frequent inquiries will affect your score.
Do not shut your old account
The credit age takes into account the age of your oldest account as well as the average age of all accounts. The older the age is, the better your credit card will be. So, if you have an old account, it is best not to shut it. Further, you must not open too many accounts in one go as that can affect the average age and harm your total credit score.
If there is any adverse information on the credit report, such as bankruptcy, too many inquiries, or late payments, the least you can do is pay your dues in time. However, time is your biggest ally in improving your credit score. There is absolutely no quick way to do things. The amount of time it will take for you to change your credit score depends on the reason how you change it. All your delinquencies will be a part of your credit score for seven years. So, they will be in the public record for seven years. However, the inquiries stay in your report for two years, and bankruptcy stays for ten years. In any way, rebuilding will take time. So, keep at it.