Credit scores are like report cards for adults when it comes to credit financing. It is somewhat of a 3-digit grade that a person gets, based on a scale that is from 300 to 850. This score is what shows the creditworthiness of an individual to any potential banks, lenders, insurance companies, property owners and even employers. The higher your credit score is, the better off you are.
If a person does not possess any substantial black marks on their credit score report, like let us say bankruptcy or foreclosure, they then have the chance to increase their score in just a few months. There is no quick or magical way to increase ones’ credit score. Each situation is unique in regards to the individual. There are always variables that come into play when it comes to a person’s credit score. However, one needs not worry, increasing your credit rating does not have to be a decade long process. There are various tips that one can follow in order to improve their score but this is only possible if they have a credit report that is free of black marks. Some of the tips that can help you improve your credit score include:
Review Reports From All Three Credit Reporting Agencies
The first step is reviewing your credit report from the three major reporting agencies. Immediately after, one should clear up any errors of which may include late payments, credit limits or the collection of items not theirs. One can get free credit reports from the three credit agencies once a year by going online. If you are requesting to see your credit report, it will have no negative effect on your score.
Pay Your Bills On Time
One should always pay their bills on time. Delinquencies on ones credit report present a significant negative effect. Settling bills late can lead to low credit scores. There are systems one can put in place such as automatic withdrawals from their checking accounts in order to avoid late payments. In the case that one has overdue bills, they need dealing with immediately.
Reduce Your Overall Debt
When you pay down your credit card balances, it reduces the overall debt that is on ones’ credit report. This is an effective way to bring up your credit score.
Keep Unused Credit Card Accounts
A person should avoid closing their unused credit card accounts. When a person cancels their card, it may actually lower the credit score they have. If you have a long credit history, it helps to increase your credit.
Avoid Maxed Out Credit Cards
You should not max out the credit cards you have. A good rule to follow when it comes to credit cards is to keep your balances 30% and below. It is more appropriate for one to have two credit cards that are below 30% on the limit than have one that is always maxed out.
Shop For Loans All At Once
When doing your loan shopping, it is best that you do it as quickly as possible. The reason for this is that a persons’ credit card score goes down when they shop for a loan. The process of submitting applications for loans should take place between periods of two weeks. When a person has various credit inquires, it decrease their credit score. If they are all done around the same time, they will be batched together and your report will only show one inquiry instead.
Secured Credit Cards Can Help Build Credit
It is also advisable that a person gets himself or herself a secured credit card. If a person lacks some kind of credit card history or has a credit card score that is relatively low, a secured credit card will help them in creating credit. This is possible because of the information that is sent back to the credit bureaus. The first step is to give a security deposit of at least a few hundred dollars, held as collateral by the issuer. For some secured cards, there is the chance of credit of extension if one is responsible with their credit for the duration of at least six months.
One also has the option of getting a gas store card. It is evident that most of us want to purchase more items on credit apart from gas, snacks or beer, despite this, acquiring these types of cards is easier as compared to regular credit cards. If a person is trying to establish good credit history, their ability to make minimal monthly payment charges, in a full and on time, helps to boost and raise their credit score rapidly.