How Can I Improve My Credit Score? It is so important question now a days. Your credit score is not only only used by banks to assign interest rate you will get but also used by insurance firms and employers to see how risky you are. Many lenders base their decisions on your credit score which reveals your creditworthiness due to the information, especially payment history, in your credit report. Generally, credit score ranges are like:
300-579 = Very poor (You may need to pay a fee or deposit and your approval is not guaranteed.)
580-739 = Fair (Subprime borrowers)
670-739 = Good (You have a chance to improve your score)
740-799 = Very Good (You may receive better than normal rates)
800-850 = Exceptional (top of the list borrowers)
Why Is Credit Score Important?
The higher your credit score is, the more chance you will have to get approved so before applying for a loan, if your credit score is low, it is essential to maintain a good credit score or work on improving it to prove the lender that you qualify for a loan. Also, your credit score determines the terms of the loan. There are various elements which affect you credit score including your payment history, credit utilization rate, total debt, bankruptcy, type/number/age of your credit accounts, number of new credit accounts you have opened and number of inquiries for your credit report. Several ways to improve your credit score are mentioned in that article.
How To Improve My Credit Score?
You can improve your credit score by taking some simple steps. Firstly, you need to check your credit report and correct possible mistakes. Secondly, since your payment history plays a big role on your credit scoring, you need to avoid late payments and defaults. If you make your payments on time, you have a chance to present your ability to pay back debts timely to the lender. You can start with getting rid of older debts, establishing good credit habits, keeping your utilization rate low and cleaning up your bad credit record by paying off overdue bills and monthly payments. You should avoid applying for new credit card or large loans. A hard inquiry is required while applying for each loan and that can lower your credit score. Also, score-boosting programs can be helpful to improve your credit score.
Credit Building Cards
If you have a bad credit history, you may consider applying for a credit-builder credit card. Although they often come up with low limits and high interest rates, they can be extremely beneficial, since they allow you to pay off your bills on time. As you complete your payments timely by using one, you have a chance to increase your credit score and eligibility.