Improve Your Credit Score
If you have ever thought of improving your credit score, then this is the right time as well as the right place for you to be. A lot of people through unawareness have greatly affected the rating of their credit score, and this has led them to much frustration. I’m going to enlighten you on how to go about your credit to improve or increase its score. Suffice it to say that your credit score is comparable to your driving record. In these two cases, it is paramount to take into consideration years of previous record and not just their present behavior. The score ranges from 550-850 and can only reach the top through filling in each action required within separate categories.
It is necessary to keep a close look on your credit score either through online method or by putting a call through to the credit bureau. In addition to putting things in order, it is pertinent that you always remain persistent by continuously reviewing your credit report. Following some easy steps can help you improve your score drastically. Here are some of the steps and procedures you need to follow to ensure a great improvement in your credit score:
✓ All nuisance balances should be totally eliminated
According to John Ulzheimer, a former Equifax and FICO credit expert that is recognized nationally, “eliminating nuisance balances is one sure way of improving your score.” What does he mean by nuisance balances? Those little balances on your credit cards are referred to as nuisance balances.
This strategy can improve your score because the scores on your credit cards are largely affected by the number of balances you have in them. So charging a little amount on one credit card and another meagre amount on another can affect your score in a negative way. To improve your score, the solution is to gather up your cards on which there are small balances and clear off the payment. Then select a single card that can be used for everything.
✓ All old debt (that are good) should be left on your credit report
Yes, it was a debt, but that doesn’t make your credit report to be bad. This is probably the thought of most people. After paying off their debt, they believe the next thing to do is to put a call through to their credit bureau to get it removed from their credit history and to close the credit card all together. This is not so. Keep your oldest accounts in order to receive the benefit of longevity on your credit history.
There is what we call good debt. This is debt that is well handled and paid at the stipulated time. This kind of debt is perfect for your score, and the longer the history of your good debt, the better your credit score becomes. So to improve your score, leave old accounts that have good record of debt payment as long as possible.
✓ Ensure that your bills are always paid on time
Whether you pay your bills on time or not has a great effect on your credit score. Your credit can be easily be damaged and the score can be hurt if your responsiveness to paying your bills is poor. According to Linda Sherry, the Director of national priorities for consumer action, “the details or information on your credit history have a great impact on your credit score.” Therefore, it is essential that you have a good record when it comes to paying your bills. There is nothing wrong in engaging in big purchase (like car and house), all that is needed of you is to ensure that you make the necessary monthly payment when due.
✓ Your calendar should be used
When shopping for a car, home or seeking for student loan, it will make a whole lot of sense if your shopping time is within 30 days.
Applying for credit can lead to a reduction in your score that may last for a year. The sole reason for this is that if a person is making different applications for credit, it implies that he/she wants to make use of more credit. Ensuring to apply within the 30 days and applying for the same kind of credit will only affect your score once. With three (3) types of loans – auto, mortgage and student loans, scoring formulas gives you the privilege of making different applications but sticking to just one loan.
What the FICO score (a score that is mostly used by lenders) does is that it ignores any inquiries that is made in thirty days before scoring. If some that are over thirty days are found, those made within a shopping period will be counted as a single inquiry. The duration of the shopping period largely depends on the used credit score.
✓ Do not hint at risk
Seldom times, a good step to take to improve your score is not to do something that will put it at risk. Among other changes responsible for scaring your card issuer, although this may not affect your credit score, is by taking-out cash advances or to make use of your card at businesses which may indicate future or current money stress. For example, a divorce attorney or pawnshop.
✓ Your credit card balances should be keenly observed
A main factor to be considered in your credit card is actually the number of revolving credit you have against the number you are really using. The percentage of these two ratios have a great impact on your credit score – the smaller the better. I personally will not allow myself to carry balances over 35% of my credit card limits. I will also would rather not have more than 5-7 credit cards in my lifetime. I suggest choosing cards wisely and giving your credit some time to mature before opening a new credit card with added benefits. The best percentage: 30% to 35% of the credit limit. As an example, if you had a credit card with $1000.00 limit, you would spend only up to $300 to $350 before paying it down again.
To increase your credit score, try as much as possible to reduce your balances, and make sure they are kept low at all times or right before the cycle scheduled day. This day can be calculated by looking at the credit card bill. A credit counseling professional company such as Eneyvel’s Financial can give you the specific steps to take to improve your personal or business credit.One thing most people don’t know is this – even if your balances are paid in full monthly, there is still chance of having a higher utility ratio than you would anticipate due to this cycle day the credit burea accounts as the balance. A good strategy to this is to send more payments all through the month. This would ensure your balances are at a low percentage compared to the limit of the credit card.