Your credit score will determine whether or not you qualify for personal loans. From simple payday loans to long term loans like mortgages, all lenders look at your credit score before giving you a loan. The rates of the loan are also determined by your credit score. The ideal way to ensure that your credit score is at its best is to pay off debts in time. Not doing this affects your score. How can you quickly improve your credit?
Look at Your Credit Reports Keenly
The main credit report bureaus are Experian, Equifax and TransUnion. Lenders usually share credit data with them and they compile a credit report based on this information. These reports are computer generated and rely on the information provided by the lender. They are therefore prone to errors and these have been reported. Take a keen look at your report and notice if there are any errors.
You can request a free copy of your credit score once a year from these bureaus. Once you have the report, look for payments that may not have been indicated, typing errors and so on. These errors could be affecting your credit score and removing them will instantly improve your score. Raise a complaint with the credit bureau and it will be resolved within a short time.
Maintain a Low Utilization Ratio
In calculating your credit score, your credit utilization contributes 30%. What is this? Credit utilization is a measure of how much credit you use versus how much you are given. It is data that is mainly supplied by credit card issuers. The amount of credit used is divided by the total amount of credit available on the card.
The lower the credit utilization ratio, the higher your credit score is. It is advisable to maintain this ratio at 30% or lower. You can do this by only charging essential purchases or use several credit cards instead of just one for all your payments.
You may also request for a credit increase. This is a simple process that will help you access more credit without affecting your utilization ratio.
Pay Off Old Debts
Delayed payments are the biggest hindrances of a good credit score. Having all your debt accounts up to date will improve your score significantly. Make a lump sum payment of all delayed payments and keep paying on time to see a gradual increment in your credit score.
Enroll for a Credit Boost Service
Credit cards and loans may be your biggest credit contributors but there are other forms of credit you can add to your report to improve your score. Join a credit boost service that will share your utility bill payment details with the credit reference bureaus. With these details on your report, you will probably have a higher score especially if you have been paying these bills on time.
With the above tips you will be able to improve your credit score significantly. If your credit score is really bad, it will take much more time and effort to get it to the best. How much credit score is considered good? The credit bureaus usually rank credit score using figures ranging from 300 to 850 with 300 being the worst. If your score is below 650 you should be worried and take the right actions to get it in the green.
Alex Capozzolo is a partner of Cash Offer Kentucky. We buy houses in Louisville, KY. Alex has been writing for the real estate industry for several years. Cash Offer Kentucky focuses on single-family and small multi-family houses.