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Improving Your Credit Score


It is quite natural for us to evaluate where we are at financially and consider what we want for the next few years. If we want a new house, a new car, or another degree or even a trip abroad, we need loans sometimes! And these can be achieved through having a good credit score.

What makes a credit score good? Well, a good credit score is anything that is above 670 according to the FICO credit scoring model. It will allow you to access more loan and open you to more credit card options with better and possibly more favorable interest rates. You should always aim to keep your credit score to 850. Because 850 is the maximum and most favorable.

There are other models for credit scores as well, but essentially, a higher credit score means better credit scores. This article will walk you through some of the ways you can improve your credit scores.

Automatic Bill Payments

Possibly, the most important item on your credit score report is your payment history. Make you’re your credit report has no traces of missed payment. You can do this by putting your bills on auto-pay. You need to ensure that you have enough money in your corresponding account to cover each bill. You don’t want an overdraft! So get that automatic bill payment system activated so you don’t have to worry about forgotten bills. Now we can get to the other aspects.

Joining An Account

Another way to improve credit is by joining a family member or friend or any another trusted person’s credit card account and become an authorized user. Then if you make any transactions and payments on that credit card, they will show up on your credit report. The cache is to pick a reliable and an appropriate person to join accounts with. Keep in contact with the primary user/owner of the account and pay them for the purchases.

Secured Credit Card

A secured credit card eliminates the possibility of you not being able to pay off your balance. It requires the user to make a regular deposit. That deposit ultimately becomes your credit limit. This helps immensely in improving credit score. If you are currently using a secured card responsibly, you can later upgrade to a traditional unsecured card.

Don’t Close Off Old Accounts

Even if you are no longer using your old credit card, you can choose to keep it open for improving your credit score. This is because your credit score will rise thanks to a good credit history and also thanks to a high total credit limit. 

If you close your old accounts, this can lower the average age of your accounts and ultimately will lower your total credit limit. It can take years before an account closed (with a good credit standing) drops off your credit report, but once it does, the effects are going to the abrupt and immediate.

This can be a problem if your old credit account has high fees. In that case, it is best to close it off or try to get a no-fee version from the issuer. It all depends on your situation.

Credit Builder Loans

If you are a beginner at building credit and are trying to increase your credit score after a drawback to it, then a credit-builder loan from any credit union could make your credit score rise. This requires you to make fixed payments for six to 24 months. This money will sit in a savings account that you will be able to access when the loan term ends. While you’re depositing money, the credit union will report that you have been making all the payments regularly to the credit bureaus. This will help increase your credit score.

Paying Down Balances

Another very crucial component in a credit score is how much debt you have in relation to your credit card limit. This is called your credit utilization ratio. You need to make it your goal to lower any high interest credit card debt. Because these cost you more money in interest than a student loan!

This can also show that you’re a responsible spender and subsequently improve your credit score. Experts suggest that it is better to keep the credit utilization ratio below 30% of the credit limit at all times. People will one digit credit utilization ratios generally have high credit scores.

Keep track of your Credit Scores

Keeping track of your credit scores has its benefits. For example, you can intervene quickly if it ever drops. You can also alter the factors that have an impact on your score, for example any late payments or recent hard inquiries. You can monitor your credit score in many ways. You can either do it for free, like through your current credit card issuer or through banks. You can also do it through Experian.

While there are many other ways to improve your credit score, these will suffice for now. Hopefully, you can use these and have a better credit score. The following website will show you ways to raise your credit score fast! 

So, what do you think ?