Your Credit scores are decision making tools to evaluate your creditworthiness. The three digit statistical number defines how financially trustworthy a person can be. It evaluates the probability of repayment of the debts owed by a person to the lender. Credit score are sometimes also known as risk scores since they account to the assessment of the risk associated with the repayment of the debt. Hence, Your Credit scores matter a lot when it comes to the anticipation by the lenders of how likely you are to repay your debt on time.
Boosting your credit score is important because it determines if you will qualify for a loan or not and it also is a key factor when it comes to the interest rate of the loan you qualify for. A good credit score leads to a good interest rate of the loan you get and saves you hundreds and even thousands of dollars.
A high credit score helps you in leading the life you want whether you are looking for buying a new home or purchasing a brand new car of your dreams.
Credit score is based on the data from a person’s previous credit history and the higher the score is , the more financially reliable a person is considered to be.
How to boost your credit score as quickly as possible and in an efficient way is the goal of this article and we will read about some of the most useful ways of achieving it.
Different lenders have different set of standards for rating the credit scores but on an average a credit score of 700 and higher is considered to be good. Knowing your scores and working on it in a smart way will help you with grabbing the right opportunities for you in terms of which offers to apply and which areas to work on before you apply.
Your payment history that shows your records of whether or not you’ve paid your bills on time is an important factor in achieving your goals of a good credit score. Another factor that accounts to your scores is your utilization ratio which means how much of the total credit you have available is being used by you. Lenders believe that the borrowers who have a high utilization rate tends to miss payment. The length of your history is another factor that is determined by the average age of your accounts and how long it’s been since those accounts were used. Factors like the types of credit you owe (such as a car loan or mortgage) and the frequency of the number of accounts you’ve opened are considered by the lenders to decide your accountability that you can manage different kinds of accounts in a responsible manner.
Therefore, keeping the right strategy in hand and considering these important factors will help you boost your credit score.
We are going to discuss these important factors and more in details in this article to help you achieve the right credit score for you.
Boosting your credit score requires prompt actions and right strategies. Here are some of the most promising ways of shooting up your credit score fast and correctly:
- Pay your bills on time. Everyone’s credit history is different and requires different approaches. So the answer to what should be the right approach for you really depends on your individual credit history. Making your payments on time is the most important factor in credit scoring. Your payment history including all the payments that you might have missed or paid late makes a serious impact on your FICO score. While it might sound difficult but it is possible to change your credit score fairly quickly however seeing any improvement could take 30 to 60 days. Paying your bills on time is extremely important when it comes to improve your credit score. You should make sure all of your accounts are up to date and current. If you had late payments in the past you should take proper course of action to fix it ASAP. Late payments remain on the credit report for seven years but the longer ago they occurred, the less they are going to impact your credit scores. Make sure to bring all the accounts that are currently past due to current in order to rebuild your credit history. Your payment history is the most important factor for FICO scores and it account for up to 35% of your credit score.
- Do not close any cards. Most of us might think that clearing all your due bills and getting rid of your credit cards will fix everything and will bring your credit score to a higher level. This is however not true and cancelling a credit card will cause your available credit to drop which will not look good on your credit report. Closing a credit card account can hurt your credit score even after you’ve paid your remaining credit card balance. Your credit score is based on several factors and closing a credit card account can have a significant impact and it might do more harm than you realize. However if you are unable to use your credit card sensibly then closing your card could be a responsible move however you should do it correctly. If you must close an account you should avoid closing your oldest ones. The longer an account has been open, the better it will improve your credit score. Closing an account early in your credit history can affect your credit score negatively and indicate risk. You should rather consider cancelling cards with higher interest rates or annual fees.
- Focus on your Risk Factors. If you are planning to make a major purchase such as buying a home or getting a new car it is wise to check your credit reports at least 3-6 months in advance in order to start making any necessary changes. You should consider ordering your credit report and credit score in advance to determine all the risk factors involved and to fix them on time. Your credit report and score in hand will help you in deciding what you need to work on to improve your credit scores as quickly as possible. Your credit scores should come with a list of the factors that are affecting your scores. These are in fact the risk factors that are causing your score to go down and these will eventually help you understand the necessary changes you can make in order to have a better chance at improving your credit score. The higher your credit scores the lower the rates will be for your mortgage loan which in turn saves you hundreds and thousands of dollars on interests. Focusing on risk factors and fixing them on time will boost your credit score fast.
- Keep your credit utilization low. In order to avoid damaging your credit score you should use 30% of your available credit limits. The lower is even better; however keeping it Zero may actually be a negative factor. Credit reports with small credit card balance have higher FICO score than those with zero balance. The bottom line is that creditors want to see if you use your credit card responsibly so lower is better for your credit score. Keeping your balances low is one of the most important factor in boosting your credit score. Your credit utilization rate refers to the balances you have on your credit card accounts. This can be calculated by dividing the total of all your balances by the total of all your credit limits. Your credit utilization rate is also known as your balance to limit ratio. You should keep the balances on credit cards as low as possible. You should aim at never having utilization rates of more than 30% on any one card or in total. In order to have the best scores you should try to keep your utilization rate below 10 Per cent.
- Raise your credit limits. Having a higher credit limit can help you increase your credit score. You can use a credit limit increase in order to build credit. A credit limit increase will help you by improving your utilization rate. For example, if you have a $1,500 balance with a credit limit of $ 3,000 then your utilization ratio comes to be 50% which isn’t very impressive. However, if your card increases your limit to $6,000 you’ve brought your utilization rate down to 25% without paying down the balance at all which is much respectable than the former scenario. So call your credit card companies and request a raise to your credit limits and following the above mentioned strategy improve your chances of boosting your credit score fast.
Following the steps mentioned in this article will certainly improve your chances of a better credit score and hence will further help you with your financial goals. A higher credit score means lower mortgage interest rates, better credit card offers, better insurance rates and a happy future.