Well, we all know the significance of a good credit score. It definitely cannot be overstated. The creditors and banks evaluate your creditworthiness based on this score. A credit score not only demonstrates your financial habits but also how responsible a person you are generally. Credit bazaars offers you 20 ways in which you can raise your credit score quickly and efficiently, as mentioned below:
- Understand the components that form your score: It is crucial to know what the score comprises of and the way it is calculated. An old enough charge can be easily removed for improving your credit report score. When you know exactly how your score is calculated, you can make the most of the tools available to you at hand.
- Analyze errors: It is very common to spot inaccurate entries or errors on the credit reports. It is actually surveyed that 1 out of 5 customers are impacted by such mistakes. Online dispute form is provided by agencies where you can submit your corrections if there are any mistakes spotted. Additionally, follow up for checking that the corrections are made. Make note of any discrepancies by taking out time to examine the reports and check them against your own records.
- Leaving old debts on your credit report: You might want to remove all traces of any debts wiped off from your report as and when you pay off your auto or home loan. However, as long as your payments are complete and paid timely, these debt records can actually help improve your credit score. It might come as a surprise, but it is true. Similarly, credit card accounts also work in the same way, they may prove beneficial for you when the records show that your payment is done from time to time every month. To be honest, an account that is paid in full is actually a beneficial thing to the person and closing it is not actually advantageous to the consumers who hope that doing that will actually impact their credit score positively. It is helpful to have an account that has a solid track record and a long history of timely payments, every time, is the habit of the consumer that is preferred by creditors and responsible habits lenders. It is assumed that all the bad debts are removed over time that negatively impacts your credit score. Even bankruptcies cannot stay on your credit report for longer than 10 years. Similarly, delinquencies and late payments such as foreclosures, repossessions, settlements, and collections are capped at seven years generally.
- Take advantage of score-boosting programs: The average age and number of your accounts are two most crucial factors for helping the lenders for determining how good you are at handling debt, that can leave those at a disadvantage, who have a limited credit history. You can avail of the various score-boosting programs that can guide you step by step by providing you tips and tricks on improving your credit score.
- Improve credit utilization ratio: You improve your overall credit utilization ratio by raising your available credit similar to asking for a limit increase on your single card. This can be done by requesting a different card from an already existing creditor or just by applying for a new credit card. If you are in good relations with your card issuer, they will more than happy to give you another credit card.
- Debt consolidation: If you have numerous credit cards with small sums in them, just get a consolidation for paying them off. This will have two major advantages on the credit score, mainly, it will represent a better credit mix and it will show that the credit accounts are paid in full. The credit mix is basically a combination of both installment and revolving credit.
- Settle collection accounts and outstanding balances: IF you’ve had a write-off or a default, it might have gone for collections. Try negotiating with the collection agency if you have the ability to pay a portion of the owed amount immediately. Get this deal in writing such as “paid as agreed”, prior to making any partial payment. Also, check if any debt is not mentioned twice in the report, one by the collection agency and the other by the original creditor. In such circumstances, just send a dispute letter to have one entry removed to the credit reporting agency.
- Time your applications carefully: A tough inquiry can be pulled on your report each time you apply for a new line of credit. Such kinds of inquiry temporarily lower your score. Also, do not apply for numerous credit cards within a short time period.
- Request for increasing credit limit: Basically, credit utilization makes up for a good amount of credit score and it is depicted as the amount owed and the available credit. This is applicable to individual cards and your complete debt to the credit available ratio. If you request the agency to increase your credit limit, the credit utilization will be lower and you will be in good standing with your card issuer.
- Be patient: As you change your credit habits, be very patient as the credit score will not increase overnight. That is why the best technique for achieving a great credit score is developing long-term credit habits. The two major aspects that influence your score in the oldest account on your report and the average age of information. It is seen that though it takes a short time to trash up a good credit score, it takes a good amount of time to increase the score. Create healthy habits such as keeping a low utilization rate, applying for credit only when required, and paying up balances on time, and such exercise is mirrored over time in your score.
- Understand when to transfer: It is very important to understand when exactly you should transfer debt from one card to another for making a difference. In cases where you haven’t used your credit card in a long time, you can transfer the balance from a new card which can increase the average age of your credit lines. Make sure that you contact the credit card issuer, asking for raising your credit limit so that it does not impact your utilization ratio. Just transferring balance from one card to another without thinking is just like shuffling them between piles.
- Monitor your credit: Surprisingly, when you monitor your credit score, a soft inquiry is dragged, that does not affect the credit score as compared to hard inquiries and the effect is temporary. You might not be able to see all your financial accounts in one area in the information mentioned in the credit reports. However, if you review them properly, you might be able to notice identity theft. Understand how well you are managing credit and notice if any changes are required to be made.
- Secured credit cards also count: If you’re not getting any other card, secured credit cards can be a good way to go. However, it is used as a last resort most of the time. The thing to make sure here is that the card you choose reports to the credit bureaus and charges low fees too. Few of the secured credit cards transition to a revolving credit line after a specific period of time, as long as you have made timely payments.
- Pinpoint what to improve: Just having an error in your credit report does not mean that it is resulting in bad credit for you. There are mistakes that really affect your score negatively such as a stolen identity, credit information mixed with somebody else’s information, defaulting in one loan but shown in multiple, a bill has gone unpaid for a while and so on. It is important to understand the exact reason for your bad credit score in order to resolve it. The various features to study for investigating the exact things for improvising are the account mix, age of accounts, payment history, amount of debt, history of credit applications and so on.
- Plan creation: Create a full-fledged action plan for understanding what exactly went wrong and ways to improvising it. It is also important to check where the credit score was impacted over the period of time. Firstly, you should try to keep your credit card balances at a lower end laterally with any other revolving credit type that you may have. Moreover, closing unused credit cards just because you want a quick fix for improving your credit scores is not that helpful. You should mainly begin by paying down debts rather than just moving it around.
- Building a strong credit age: There are not too many steps that you can take for improving your credit if you have a short credit history. One thing that you could try is to piggyback on a family member or friend’s credit card, provided they have a long history of on-time payments. They can add you as an authorized user, though it might be difficult to find somebody who would willingly do this as it would be your responsibility if you make any changes. So, the other option could be not to close any accounts. A good age of credit history would be five years and above as the longer your good credit history, the better are the credit scores. If you have no credit history at all, it might take about three to six months from the initial date for seeing any kind of activity reported on your credit reports.
- Consider disbursing credit card statements early: Every month you pay your credit card bill as it arrives, however, it is even better to pay them earlier than that. This is because the credit card companies report to the bureaus prior to when your payment gets in and you might be dinged for using more than good credit even if you are paying off on time.
- Departmental store credit cards: These are easier to get but they also report to the credit bureaus similar to card companies. When you’re trying to build your credit, this is the perfect way to go. The only thing to remember is to pay dues on time and use the card sparingly. Using such ways, the credit score of the person increases over time.
- Fixing late payments: Remember, closing accounts will not disappear your late payments. The key bit here is to get organized and set up all due date alerts with your loans and credit cards. One can move the due dates around for your credit card payments easily on the lender or bank’s website. You can ask them to forgive them for the late payments and credit card companies are especially quite liberal and merciful if you have a long record of making on-time payments on a general basis. The credit issuers will charge you a penalty or late fee even if you are only ten days late, so make sure to make due payments before or on time.
- Don’t let the old mistakes haunt you: You might be worried as to when the credit score misery ends if you have filed for bankruptcy or suffered through a short sale or foreclosure. For all such mistakes, the credit report gets the biggest hit and the impact will only lessen over a period of time and ultimately it will disappear from your report because of the federal laws that restrict the time limit till this can impact you. Furthermore, if you happen to see an item that should not be on your report, dispute it with all of the three credit bureaus, and most likely your credit score will move up as that item is removed.
The above mentioned 20 ways in which your credit score can be increased are excellent behaviors in which your credit score worries can be reduced. Credit Bazaar guides you for all credit score improvement woes by providing counseling and proper assistance to the clients through providing various Bazaar Improvement Plans.
For any queries regarding Credit Score improvement or Loan contact Credit Bazaar CR Arcade 2nd Floor, Opposite Delta Garden, Next to Shree Mahalaxmi Restaurant, Mira Road East, Thane : 401107