Contrary to popular belief, it is possible to improve your credit scores by following certain steps. However, it can appear a little complicated for someone just beginning to do so. You should know how credit scores are calculated and then learn about the ways you can improve them.
This article will give you some tips to boost your credit score.
How You can Improve your Credit Score
Everyone’s credit situation is different, but many methods can generally help boost anyone’s credit score. Let us tell you about some of the steps you can take which will assist you in boosting your credit score.
1. Open New Accounts
Opening new and many accounts in your name is the key. You can’t have a good credit record unless you have multiple accounts, as these accounts are reported to the three major credit bureaus: Transunion, Experian, and Equifax.
These companies make credit reports after collecting data related to the consumers’ finances. These companies review and approve your loans or credit card applications before you are entitled to the above. The reports submitted by these and other companies help banks and creditors calculate the risk involved in lending money to you.
2. Pay On Time
An important factor determining your credit score is the history of your payments. Not paying back loans on time or delaying credit card payments will have an adverse effect on your credit score. Late payments get reported to the bureaus, and you can be fined and penalized for them.
Ensure that you always monitor your credit reports so that you can take immediate actions to avoid late payments. You can also set up automated payments for amounts that are due.
3. Increase Credit Limit
This can be done in two ways. You can either open a new credit card or you can request for an increase on an already existing credit card. Your credit score increases when your application for the increase is submitted and approved.
The lender or the card issuer will ask for your credit report from the bureaus, which will boost your credit score. Before applying for an increase, make sure you have done complete research on the issuer and that you are aware of all their terms and conditions.
A credit score is one of the most important numbers in your financial life. Whatever loan you are applying for, whether a mortgage or a personal loan, you must be aware of your credit score. These numbers have a typical range of between 300 to 850. Credit scores between 300 to 500 are considered poor credit scores. And the best range of credit scores is between 800 to 850.
Getting into the habit of regularly checking your credit score is crucial. It will help and alert you early in case of errors, delays, or fraud on your credit score reports. Hence, it will help you in resolving all such issues. TransUnion, Equifax, and Experian all provide free credit reports on a weekly basis.