How to improve Credit score- Best Guide
How to improve credit score is what most people are searching for on google. And you’ll find out in this article the best guide to improve your credit score with ease. Also, you must know that when it comes to your financial life, credit score is also very important.
If you must have a good rewards credit card, you must have a good credit score. Now , this article will guide you on how to enjoy a low mortgage interest rate. This is only possible when you have a good credit score.
Having a good credit score will assist you when you want to my a new phone or if you want to get a car insurance.
So, if you must build a better credit score, you must take a long process but must be of good behavior. However, all of these will improve your credit score.
Nonetheless, there’re options that won’t work for everyone. This is because there is problems other peoples search for solutions that you won’t have.
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So, before we proceed with how to improve credit score, let’s look at the meaning of Credit score.
The Meaning of Credit Score
Credit score is that number between the range of 300-850 used to know is someone is worthy of credits.
So, the higher the score, the better a borrower stands a chance from the lender. Another important thing to note here is that your credit score is depends a lot on your credit history.
For example, if the number of accounts opened, the total debt levels and repayment history, and others also affect your credit score.
Also, the credit score is mainly checks if a borrower can repay the loans at the agreed time.
Moreso, the credit score is a brain plan by Fair Isaac Corporation known as FICO. The FICO Score is widely used for credit scoring system. Many organization uses it and other financial institutions too.
Having a good credit score is to be around 700 and above. If you have this range, you’ll likely get a low-interest rate.
Though, the credit score greater than 800 is quite excellent and borrowers with this score will get huge low-interest rate.
The Factors to consider in Calculating Credit Score
Let’s look at the 5 factors to consider in evaluating a credit score:
- Payment history
- Length of Credit history
- The total account of money you owe
- New credit
- Types of credit
Now the individual history is 35% of the credit score. And this determines if a borrower will pay his debt on time.
Moreso, the type of credit users by the person also count for 10% of a credit score and it’s an indication that the person has another unpaid credit.
Though, it can be a car mortgage loan or other credits like credit card. But the length of the credit history counts for 15% of a credit score has a longer credit history and this seen less risky.
Then, the total amount of owing counts for 30%. And it puts it to the percentage of credit available to a person being used and it’s known as credit utilization.
In addition, the new credit accounts for 10% . Then, it factors in the number of accounts a someone has. This number of account applied presently will result in credit inquiries.
How often should someone check Credit Score
Individuals should ensure that they check their credit score always for errors, but ensure that you do that with adequate inquiries.
Though, many banks and similar institutions give their customers credit checks for free.
All you have to do is to check well and see if you can register for their services to get notification if your credit scores changes.
How to improve Credit Score
You can improve on your credit score by following the steps that will be discussed below:
Make sure you don’t close any Paid-off account
If you close any unused credit card account, it’ll lower your credit score and also reduce your available credit. But when you keep them open and unused, you can manage the credit effectively.
Just thing about it well before you deactivate your old credit card account. This is because a long credit history will help to improve your credit scores.
Avoid Having Different Types of Credit
It’s obvious that the FICO Company loves to see consumers using both installment loans and credit cards. But if you’re repaying students loan, car loan or mortgage, you should have like one or two credit cards.
However, having more than one credit card its own negative effect. You should have more than one credit card to show that you can handle credit effectively.
Shopping for a New Credit within a short period of time
If you’re applying or shopping for a mortgage, car loan or a credit card, your lender will check your credit proof. What this means that too many inquiries could affect your credit score over a period of time.
Only Apply for a New credit Card Occasionally
Applying for a new credit card occasionally is one of the ways on how to improve credit score. Also avoid opening many new credit card accounts in a short period of time. This act can lower your existing credit score.
Increasing or improving your credit score is really something worthwhile. This is very important is you want to apply for a loan or even make some big purchases.
Interestingly, new purchases include car or home or even qualifying for one of the best card rewards.
This can take some time to achieve, but if you have a improved credit score, it makes the journey a lot easier.
However, you can also seek the assistance from credit repair companies to remove the negative marks on your score.
It’ll be a good step if you start a journey to improving your credit score today.