Credit score
You might not know the importance of having a higher credit score until you visit a financial institution for, most probably, some financial backings. A credit score is a number, always in three digits that lenders use to help them decide whether they grant you a credit card or loan. The higher your credit score you have, the higher the likelihood of securing a loan or a credit card. That said, a higher credit score is an important factor in your financial life.
If you are reading this you most likely aren’t impressed with your credit score. And that is okay. What matters now is how to get the score up. I must say that increasing a credit score takes time but the sooner you start working on it the better.
In this article, I will explain several ways that will see you increase your credit score. These tips are not only from financial experts but from me personally. Let’s dive in.
Get your bills paid on time
This is the most important step to take while trying to get your credit score up. Usually, lenders tend to see how reliable you are with paying your bills. Normally, a good future payment performance is best judged by past performance. Commit yourself by paying all your bills on time, usually before their deadlines. Bills are not only rent, or utility. They include loans, student loans, auto loans, mortgage, credit cards, etc… Note that late or missed payments usually appear as negative information on your credit report for seven years. However, their effect on your credit score reduces over time.
Pay off huge debts
If you have several creditors on your neck, start by clearing the highest balance. Usually, we are tempted to start with the smallest ones with a belief that it will give us the motivation to face the biggest one. That might be true but doesn’t apply when trying to build your credit score up. Due to utilization ratio, the bigger one damages your credit score more if you start paying off smaller debts fast. Settle it first and your credit score will improve faster.
Apply for credit when you need it
Are you always in a financial institution inquiring about credit? If your answer is then to ask yourself these questions
l How bad do I need the loan?
l Is it worth it?
l Can you do without it?
Avoid making credit inquiries every so often. You might not realize it but it’s not only bad for your credit score but also unappealing to your lenders. Keep in mind that every time you are applying for a loan you are taking away points from your credit score. Also, don’t apply for multiple loans in what most people term as “research” or “gamble”: “I applied for three loans but I really hope this ONE is approved.”
Do a regular review of your credit report
As you may know, you cannot have just a single credit score because of different credit bureaus with your credit data. Also, You can’t have control of a credit score a lender uses to grade and assess your credit report. However, you can be in charge and control your credit reports, which your credit score relies on. Always check for errors and reporting mistakes with normally do happen. An error can cost your credit score big time thats why it is important to review it regularly. Once you spot an error, discuss it with the credit bureau responsible. Once they delete the error, you may notice an improvement in your credit score.
Attaining the highest possible credit score won’t come overnight. The steps above will, however, get there sooner. Be sure to develop good credit habits, apply for credit only when you need it, pay your bills on time, and keep a low utilization rate.