Improving a bad credit score to a good one can be troublesome, especially when several factors are affecting it, like bad credit history, late payments, etc. Credit scores collect years of past behavior alongside your credit history and current actions. The fear of unkempt credit cards and late payments are enough to worry you alone, so, it is important to go over the basics on how good credit score affects you as well as on how to improve it. Throughout this article, we will go over the importance of good credit score and how to achieve it through 5 expert tips.
What Good Credit Score Means to You
Before we dig further into how good credit score can help you, we need to completely understand the significance of a credit score and what it involves.
Your credit score consist of a three-digit number, whether low or high, that ultimately will be a deciding factor on an approval or refusal to a loan. Its credit calculations will then be utilized for information through your credit report. From there, it allows banks and lenders to understand the risk of them lending you a loan and you likely repaying the debt.
Obtaining a good credit score is dire to obtaining loans, most importantly, the opportunity to qualify for apartment or house rentals, lower car insurance rates, favorable interest rates on unsecured personal loans, etc. There is clearly perks to obtaining a great credit score, but, for some it has proven to be difficult to attain with bad credit history.
We will discuss 5 easy tips to increase your score so you can have the chance to reap the benefits.
How to Increase Your Credit Score: 5 Key Tips
- Pay on Time
It may sound like a clear and obvious practice, but many tend to lack the time management in paying debts on time.
- Keep Old Paid Debts on Your Report History
The fear of old debt preventing you from qualifying the house of your dreams may convince you to delete the history itself but, on the contrary, it may be a positive deciding factor to an approval on a loan.
- Improve Your Credit Utilization Ratio
Credit utilization amounts to your balance in credit cards relative to your credit limit, which ultimately plays a major role on how your credit score is conducted.
- Research and Verify Your Credit Reports
It’s important to verify all of your credit history on the reports since errors or fraud may cause your score to appear lower than it is.
- Limit Your Amount of Credit Cards
The best rule of thumb for the amount of credit cards a person should maintain is about 3-4 cards. A large amount of credit cards can be hurting your rating, especially when there are various debts in each one.
Need More Advice on Credit Scores and Financial Inquiries?
Avoid the headaches and frustrations on how to improve your credit score and, instead, contact us today and ease your mind with a step by step on credit education.