Are you in the process to improve your credit score? If yes then remember this is nothing less than a marathon and doing so is indeed worth the effort. Having a poor credit score can cost you more potentially over the lifetime. It can also result in serious stress thereby giving you the feel that you cannot repeat the past mistake but need to move on. Relax; you are not alone in this race. There are myriads of people struggling in improving their credit score. Today there are multiple ways of building good credit along with reaping the rewards associated with having that good credit score.
Augment FICO Scores
While planning to augment the FICO score make it a point to check the credit score regularly. Keep reminders for payment and work to cut down the total debt which you owe. The payment history will contribute about 35% to the FICO Score calculation. The truth is this category can as well as will have a highly noteworthy impact on the way in which you can augment the FICO score. To know how you can do this, check out this blog post. Mortgage originators commonly use rapid rescoring to improve the credit score. It includes two processes- first it will correct and update information which they will send to a credit bureau. After the rapid rescore gets completed, this information will be added to the credit file of the consumer within a few days for updating and improving the credit scores right away.
Ways to Improve Credit Score
Take a look at the different ways in which you can improve credit score,
- Accurate Credit Reports- First you need to check the credit report. Credit reports are of 3 types- TransUnion, Equifax, and Experian. Often these reports can and have mistakes/errors on them. Because the credit score rests on the data present in the credit report, to ensure that all information is accurate is incredibly important. If you make any discrepancy or error on the credit score, this mistake will reflect on the credit score. Generally, the credit tiers will appear as follows-
750+: Excellent Credit
700-749: Good Credit
650-699: Fair Credit
600-649: Poor Credit
Below 600: Bad Credit
- Identify What Needs Improvement- The next vital step is to identify what needs improvement and what is resulting in the dip on your credit score. Some possible reasons include,
- Stolen identity and the credit abuse by the thief
- A collection account reported from years ago
- The bill that was supposed to be paid by the ex has gone unpaid, and you are suffering the consequences.
- Defaulted loan
- Your credit card mixed with someone else having a similar name
- Create a Plan- Despite the credit card information being accurate but there is a fall in the credit score, then create an action plan. Begin by paying the debt instead of moving it around. Do not close an unused credit card on the lookout for any quick fix strategy for improving the credit score. Do not open a new credit account which you do not require.
- Fix Late Payments– Another way to improve credit score will be by fixing the late payments. Fix an alert for the payment due date with all the loans and credit cards and get organized.
- Strong Credit Age- A credit history with a decent average age will be 5 years and above. The longer is the positive credit history the credit score will automatically be better.
- Clear Up Collection Accounts if Any- Pay the debt rather than transferring it repeatedly to new accounts. Get in touch with a debt collector to see whether they will stop reporting every major credit bureau about the debt in exchange of complete payment. Always get the promise in writing before making the payment. If there is a debt which seems inaccurate or you do not recognize it, report a dispute about this to all the three credit bureaus. That can quickly improve the credit score.
- Avoid Old Mistakes to Haunt You Unfairly- If you have suffered a short sale, gone into foreclosure or filed for bankruptcy you may think when the misery of the credit score will end. If you discover any item which must not be present on the report, dispute this with every 3 credit bureau. The moment the item gets removed it will move up your credit score.
- Have a Credit Card- Your scores are likely to suffer if you did not have any credit card before. Ensure to make payments on time. Remember a new account for your credit card having a bad history of payment will hurt you. When the score is excellent, good or fair, you will have plenty of credit card options.
- Secured Credit Card- This is a form of the card where the moment you deposit a sum into the checking account it will secure the credit line which the lender or bank is extending you. You may have a secured card having a bad credit score but adding a new credit card account having a payment history that is positive will show creditors that you are back on track. If there is default here, then the initial deposit that you made initially can be used for covering the card’s balance.
Apart from this, there are many other ways through which you can improve the credit score. These include but is not limited to- limit credit applications and fix credit utilization ratio. Following these tips mentioned above sincerely along with helping you in saving money will also at the same time teach you all valuable skills essential for upholding a good score in the future. In case of bad credit, avoid giving up entirely on credit.
Instead, try to be responsible as well as stay educated regarding your scores and accounts to handle the finances successfully. Come up with a good credit repair plan which works perfectly for your situation.
To read more on topics like this, check out the money category