Introduction
There are many benefits to having a high credit score. If you want to borrow money from lenders you must have a high credit score. Having a high credit score increases your chances of borrowing money from lots of lenders. Any financial institution looks at the credit score of a person before lending money to them. This is because they want to lend money to a person who will repay the debt on time. Not only that but you will also be able to borrow money for lower interest rates. If you don’t know what a credit score is, it is a number given to a person depicting their creditworthiness. The credit score number is anywhere between 300 to 850. If you have a credit score greater than 800 then it is considered excellent.
But if you have a credit score less than 640 then you are known as a subprime borrower. A subprime borrower gets loans for higher interest rates than usual. The credit score of a person depends on many factors like repayment history, number of open accounts, and several other factors. You will have a better chance of getting a credit card or loan if you have a high credit score. Banks don’t want to approve loans to people who have bad credit scores as they want their money to be repaid in time. You can repay the money on time if you keep track of your credit score. Use some of the applications that allow you to check your credit score for free. They will not only alert you about your credit score but also warn you about potential threats and identity theft.
Here are a few tips that will help you increase your credit score.
Keep track of your credit reports
You can easily improve your credit score if you have a track of it. Checking your credit score constantly will make you aware of the debts you have to pay. So will be able to pay ofc the debts before your credit score drops. There are even applications that allow you to check and monitor your credit scores for free. Use them and get your credit report.
Pay off all your debts
This is not something that you don’t know about. But this point has to be emphasized more and more as this is the only way using which you can drastically improve your credit score. 35% of your credit score is dependent on your credit history. So if you want to improve your credit score then pay off your debts.
Stop purchasing new things using your credit card
It is better if you do not purchase anything with your credit card. Using a credit card to purchase things will only weaken your credit score. This will affect your credit card score significantly if you don’t pay off debt on time. So if you are already due on your credit card bills and do not have money to repay them stop using it buy stuff.
Don’t close your credit accounts until you repay the debt
You are already having debts on all of your credit cards and they are only increasing with each passing day. So you have decided to close your credit accounts but think twice before doing that. At least make sure that you pay off your debt before you close the debt. This is important as 15% of the credit score is dependent on credit history length.
Get in touch with your creditors
This is something that you might not have thought about but at times this could help you immensely. You will be surprised to know that they may actually help you. Call them and explain to them about the troubles you are facing. These companies have a variety of hardship programs that can help you. This will result in a reduction of interest rates or monthly payments until you get back on your feet.
Do not apply for new credit cards
Applying for new a credit card when you already have dues on your current credit card is a stupid thing to do. If you apply for a new credit card then the lender will perform a hard inquiry. This will give them complete access to your credit report. If they find out that you have opening new accounts within a short period of time, it can affect your credit score.
Check if your credit score is accurate
According to the Federal trade commission out every five credit scores, one score is inaccurate. This means that even your credit score may have been depicted incorrectly. Everyone has a right to have a fair credit report under the Fair Credit Reporting Act. If you think that your credit score is inaccurate you can write to the credit bureaus and they will be investigating your issue within 30 days. Make use of this to see if the credit score is accurate.
Have a minimum number of hard inquiries
Before applying for a loan you have to check your credit score from different lenders for free. This will not have any effect on your credit card score as they are soft checks and lenders will only have limited acces to your credit report. But once you apply for the loan the lender does a hard credit check on you. If this happens the lender will have access to your full credit report. Several hard inquiries will have an impact on your credit score.
Automate your bill payments
Missing out on paying bills on time will affect your credit score severely. You may be late on paying bills only by a few days but the damage would have been already done. You are always being observed to see if you are paying your bills on time or missing the dues regularly. So if you are found to be missing due frequently then you will hurt your credit score.
Keep the credit card usage well below the credit limit
This is one of the best things you can do to keep your credit scores high. If you can use the credit card and keep it below the limit then it will be easy for you to increase your credit score. This will not only help you to keep your credit card score high but you can also repay the debt quite easily. Credit card companies have been slashing the limit of customers without any prior warnings. This can seriously impact your credit score. If you get maxed out you can lose as much as a hundred points which is a lot. So keep your credit card usage under the limit.
Conclusion.
You will many more benefits if you have a high credit score. If you want to pay off your debts you can even get hired by mystery shopping websites that pay you money for performing takes for them. A good credit score will not only improve your chances of getting loans but also increase the amount of money you can get. You will also get better car insurance rates for you to have a high credit score. Follow the above steps to
