A better credit score opens up all sorts of options and here are some tips to improve yours.
#1 Always Pay On Time
One of the most important parameters that affects your credit score is the payment of bills on time. If you have any account in collection, past due accounts or late payments even for a few days, they will have a huge negative impact on the credit score. Ensuring regular and on-time payment of at least the minimum amount (or more) due on your credit cards will help tremendously in improving your credit score. Your credit score will start growing when you have a positive payment history of 18 months or longer.
If you’re behind on your bills, find ways to get back on track. Make a monthly budget and plan your spending. Figure out ways to ensure that all the bills are paid on time. One of the ways to avoid late fees and to ensure on-time payment is automated payments. Get in touch with your lender or credit card company in case you are going to be late. It’s possible to move out your due date and that will help avoid any late fees and late payments.
#2 Get Rid of the Debt
The total amount of debt also plays an important role in your credit score. If there is a large amount of debt against you or your credit accounts have balances for a long period of time, your credit score will be negatively affected. You can improve your credit score by getting rid of all the debt it can help to consolidate debt with a loan from Loanza Payday Loans.
In order to pay down all the debt you owe, begin by prioritizing your budget. Take a look at all your non-essential spending, and use that money to pay off your debt. Get in touch with a credit counsellor to know more about options available for dealing with debt. They might be able to help you pay off the remaining debt quickly.
#3 Balance is Essential
Credit utilization rate which is the proportion of credit you use also impacts your credit score. We recommend keeping your credit utilization in the range of 30% to 40%. If you go above that threshold or max out your credit or carry high balances related to the credit limit, your credit score will begin to fall. However, you can increase your score by utilizing small amounts of credit and making sure that it is paid off on time. In short, having some debt in the form of installment loans or credit cards and making sure everything is paid on time, you can improve your credit score over a period of time. People who do not have established credit history typically have lower credit scores.
If you feel that your credit utilization is higher, it’s time to dig deep into your credit utilization to make budget adjustments and to re-look at your spending habits in order to bring down your reliance on credit.
#4 Get in Touch with a Credit Counselor
A credit counselor can help. Talking to them directly won’t affect your credit but you’ll get a lot of useful information on improving your credit score. Our credit counselors will work with you and help you develop a personalized plan after looking at your financial situation and exploring a whole range of options. We can also help you understand all the aspects of your credit report. Our experts can also help you understand the pros and cons of various debt management plans in case some debts are stressing you out. We are very good at it. 93% of people who choose to utilize our services leave with a complete financial plan to achieve their goals.
#5 It’s a Marathon
Improving your credit score is a marathon. When you develop a history of paying back your debts on time and holding credit accounts for 5 years or longer, you will begin to have a really high credit score. Opening multiple accounts quickly or leaving balances on your account for a long time or closing any unused accounts will affect your credit score negatively.
Credit score also gets significantly affected by bankruptcy and foreclosure though these are meant to help people deal with severe debt. Keep in mind that we are not lawyers and what we are offering isn’t legal advice. If you are considering bankruptcy, credit card bankruptcy or foreclosure, we recommend consulting a legal professional and considering other alternatives.
Your credit is a score based on patterns over a period of time with the more recent events playing a more important role. It will take some time to rebuild a falling credit score and to improve credit but it’s certainly possible. Others have done it and you can too.
