Feel confused about the credit system? You’re not alone. Not only is the majority of the population left bewildered on how to improve credit scores, but they’re unsure how the score was even calculated in the first place.
As more and more of us feel little control over our credit rating, this poses the question: can we even improve it at all? Considering that your credit score is vital to your financial security, it’s vital to fuel it with the health kick it needs. Continue reading to learn how you can get started:
Make multiple micro-payments
Making frequent payments throughout the month will drastically improve your rating without pushing your balances too high. Asides from payment history, a crucial factor to consider is keeping your credit utilization low – also known as the amount of credit you use in comparison to the level you have access to. If you’re able to make small payments and pay them off right away, your score should start creeping up quicker than you know it.
Get added as an authorized user
Credit companies judge you on a wide range of factors – even your friends. If you’ve got a thin file, a quick way to improve credit is to ask to become an authorized user of a family or friends account with a good record. The best part? You don’t even need to use the card yourself. Simply being trusted by someone with healthy financial history won’t just improve your image, but it also lowers your utilization and subsequently grows your file.
Request higher limits
Higher limits automatically lower your utilization without increasing your balance. Remember to ask your issuer if they need to do a ‘hard inquiry’ in order to make the change as hard inquiries will usually drop your score by a couple of points. Higher limits also give you more breathing space when you need to borrow more than anticipated, and it also means you won’t need to open another line of credit elsewhere.
The shotgun approach
Consider taking out a line of credit that you don’t have, for example, you may have been using a credit card for years but have never taken out a loan. By taking out a loan, you’re improving your ‘credit mix’ by showing that you can handle debt in different forms. Revolving credit such as monthly credit card payments should always be mixed with installment accounts – such as paying off a car.
Check for errors
Never trust the credit companies blindly, they make mistakes all the time and it can pull your score down substantially. Even if you’ve been keeping track of your accounts and payments, they might have marked something down as late or unpaid, and you need to check for this militantly. Equifax, Experian and TransUnion allow you to check your credit every week, and blemishes on your record can easily be disputed if they are incorrect.
Take it slow and steady
There are many ways to improve credit scores fast and we suggest you look into them all but first and foremost, don’t panic. You will be surprised how quickly your score will grow, even if it’s sluggish, to begin with, it will build up momentum if you’re diligent.
Be wary of companies that promise to instantly repair your credit, if it sounds too good to be true, it probably is. No matter what your needs are, good credit is a vital part of financial stability and growth.
Simply put, we suggest being patient. While it can take a few months to spot a noticeable difference, if you follow the aforementioned steps, you’ll be on track towards the healthy score that you desire and deserve.
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