How To Repair Credit And Increase Credit Score
In the world of finance, good credit report reigns supreme. There is a reason why financial gurus hanker on about the importance of maintaining excellent credit history. When you have a stellar credit report, every financial institution loves doing business with you.
The windows for many avenues keep opening so you can achieve financial stability without a struggle. If you require loans for a new venture, you get them with lower interest rates. The amount of loan you can secure is also on the higher side. There seems to be no end for good things with a good credit history.
But if you are an average American, keeping the numbers high on your credit card as well as the credit report can be easier said than done. The realities of life and the constant flow of bills can derail even the most stringent financial plan.
So is there any hope to improve a crippling credit score? This post will help you understand the intricacies of your credit report and how you can revive it.
How can I check my credit score?
To understand and gauge the status of your credit score, you need to see it first. If you are not sure how to have access to this information, we show you how.
- Check your FICO Score – To check your credit score, you can make a small payment to view your FICO score. This is the most accurate figure for your credit report. Lending companies will also check this score if they want to view your credit scores.To view your FICO score, visit this link.
- Check for free service with your company – Most credit card companies and banks have a free service through which you can check your credit score. These services allow you to monitor your credit report without paying any fee.
- Use your social security number – Anyone who has a social security number in the US is also entitled to credit reports for free. This applies to each of the three credit reports, minus the FICO score, once every 12 months. So it makes sense to utilize this opportunity.For more information about this, click here.
- Online platforms – Some websites allow you to check your credit report for free. However, these figures are not very accurate, and most money lenders consider them to be educational.But the score you view on the websites can give you an idea about how bad or good your credit score may be.Some of these websites include dandb.com, freescoreonline.com, and credit.com.
What is a bad credit score?
If you have been in the realm of loans, you must be familiar with this term. Almost everyone in the financial world keeps harping on about bad credit score. But how bad is it to be considered a bad credit score?
For anyone who has a credit rating between 600 to 650, it is considered a bad credit score. You might be prompted to ask if this is the damning score, how a good credit score looks like.
Below are the details of the credit ratings.
- Bad credit score – 600 to 650
- Fair credit score – 650 to 700
- Good credit score – 700 to 750
- Excellent credit score – 750 and above
When you look closely, there is not a lot of difference between a bad and a good credit score. However, it is what determines our role in the financial world. This rating might have a slight difference with other ratings, such as a FICO score.
To learn more about credit score ratings, visit experian.com.
How to improve your credit score
A bad credit score can feel like the end of your financial independence. But fortunately, there are a number of ways you can improve your credit score. Let’s dig deeper.
- Making timely payments – Timely payments alone can do wonders to start improving your credit score. Your payment history makes a lot of difference in the status of your overall credit history.Prioritize those payments that are directly linked to your credit card. These include your student loans, mortgage, credit card bills, and car loans. Any type of payment that is tied to your credit cards is reported to the credit bureaus. So it is a sure-fire way to improve your credit score.On the other hand, if you keep hitting the 30-day late mark, this can significantly lower your credit scores.
- Make substantive payments on your credit card – Keeping your debts below the 30% mark on your credit card is also a way to boost your credit score ratings. Credit card companies constantly monitor the available credit on each of your cards to compare them to the overall debts you owe. So lowering your debts will have a positive impact on your credit report.If you can bring the figure all the way down to 8 and 10%, it will increase your ratings even more. Consolidating your debts will help you reach the 30% debt range a lot quicker.
- Add diversity to your credit card mix – If you are stuck with one credit for the longest time, add a couple of new credit cards. Adding new accounts will not only lower the average account age but also boosts your credit report.But getting new credit cards doesn’t mean you start being irresponsible and blow your balance out of the water. This can be counterproductive. Instead, consolidate all your debts into one card and keep the rest active but with zero balance.You also need to be careful about adding new accounts rapidly if you have just started using a credit card. This can be a red flag to loan lending companies.
Benefits with a improved credit score
There are multiple benefits when your credit score is improved. These are:
- Better chances of getting loan approval
- Higher loan amounts
- Negotiating opportunities for loans
- Lower interest rates
- Longer repayment terms
- Access to a credit card with higher limits
As we have seen throughout the post, maintaining a good credit score is vital to the overall well being of your finances. Getting stuck with monthly bills can make it impossible to get out of the abyss of a bad credit report.
But with smart planning and the right information, it is quite possible to improve your credit score ratings and achieve financial independence.