5 Steps to Improve Your Credit Score

Your financial health begins and ends with your credit score. It describes your creditworthiness and tells lenders how responsibly you handle your debts. A good credit score makes lenders such asMaxlend loanstrust you with new loans, and the reverse is also true.

Again, a high credit score opens new lines of credit for you and allows you to access loans with the lowest interest rates in the market. If you want to improve and maintain a high credit score, this is the right place for you.

While the process will undoubtedly take you some time and effort, this step-by-step guide is a definite way to make your credit score higher.

Take Note of Your Credit Reports

Taking note of your credit reports is the first step towards getting your credit score higher. Reviewing your reports helps enlighten you on what you are doing right and those you should improve on or avoid. Look out for any errors.

While just a single report from one of the credit bureaus should provide you with the required data, get copies of your credit reports from the three national bureaus (TransUnion,Equifax, andExperian) and compare. Review your statements knowing that late or missed loan repayments, collections, high credit balances, and judgments can hurt your credit score.

On-Time Bill Payments

Irrespective of what your credit reports look like, you need to monitor and take control of yourFICO credit scoresince nearly 90% of lenders use these to determine your suitability for loans. The following factors determine your FICO Credit Score and in the following percentages;

  • Payment history- 35%
  • Credit usage- 30%
  • Ages of your credit accounts-15%
  • Credit mix-10%
  • Your new credit inquiries-10%

Paying off your debts, such as old student loans, has great significance in improving your credit score. You can responsibly do this by creating files to help you track old bills, setting due-date reminders, and automating bill payments directly from your bank accounts.

Maintain Your Credit Utilization to Under 30%

Credit utilization is the amount or percentage of your credit limit that you use at a time. An incredible way to keep your credit utilization within reasonable rates is to pay your credit card balances in their totality every month.

But since this is rarely achievable for many debtors, strive to keep your cumulative credit card balance at under 30%. You can also achieve this by asking for an increase in your credit limit. If your credit card company allows such arrangements, this will help raise your credit utilization ratio.

Increase Your Thin Credit File

People with thin credit files do not have sufficient credit history to constitute a credit report. While this is often a problem, you can become an advantage if you know what to do. And the first means of making this work in your favor is through the Experian Boost.

Through this program, financial data, which is often not used in compiling credit scores can be used for people with limited or no credit but have an excellent history of paying other bills on a timely basis. You can also use UltraFICO to fatten your thin credit file. But if neither of these is accessible to you and you are a renter with good monthly rent payment records, you can use Rental Kharma or RentTrack to fatten your file.

Improving your credit score is vital to having a good experience with your debtors, and the highlighted methods are pretty viable for that.

If you have any questions, please ask below!