5 Ways To Improve Your Credit Score

Your credit score status certainly affects your financial future. 

When you attempt to purchase a house or apply for a loan, lenders will have to look at your credit score. The higher they are, the more chances you’d be granted the money you need. Lower scores will take a toll on your interest rates and mortgage. 

Scores range from 300 to 850. At Credit Clear, we want to help you improve your credit score. This article listed five ways to get better numbers. 

Get Your Credit Report

Your credit report functions as your track record as it gives lenders the impression of how trustworthy of a payer you are. 

Before starting to boost your scores, it would be helpful to know where your numbers are at. Check your credit report–it contains your credit, repayment, and debt history. It will guide you by determining your starting point and how well you should improve. 

Pay On Time

Lenders would also want to look at how responsible you are at paying your bills, balances, and debts. Missed payments can influence their decision toward your loan. A single missed one can pin your score down, anywhere around 100 to 300. 

Remember, your payment history largely affects your credit score. If you want enhanced scores, paying on time can make a huge difference. 

Avoid Maxing Out Your Credit Card

Another big factor that may affect your credit score is your credit utilization rate. It is the ratio of your card balance to your credit limits. Maintaining your balance at a maximum of 30% of your limit is recommended to boost your credit scores. 

We know that sometimes it might be tempting to use your cards for your wants or needs, but if you want better numbers, avoid maxing them out!

Opt For Automatic Payments of Your Bills

Sometimes, you may be too busy to remember due payment dates. Or you may even not have the time to visit payment centers. It puts you at risk of missing your bill deadlines, increasing the chances of your scores to lower. 

You would not have to worry about overlooking due dates with automatic bill payments. With it, payments can be done online most of the time, before the deadline. 

Seek Professional Help From Creditors And Counselors

Communicating your concerns and needs with your creditors can surely help your credit scores. If you are experiencing difficulties financially, they can put you into temporary programs that allow you to pay gradually. 

You can pay lower monthly payments and interest rates through these programs until you have your ability back to pay right. Giving them a heads up on your situation can prompt them to create a mutual agreement for your financial and payment dilemma. 

Aside from this, credit counselors are available to guide you to improve your scores specifically. What they can do is help you in budgeting, debt management, and organizing your finances. Find a reputable and legitimate one; it will always be better to be directed on your financial status. 

Also, Check – Here’s How to Instantly Upgrade Your Financial Plan

How Credit Score Is Determined 

If you want to achieve higher credit scores, it is important to note the factors that affect your numbers. It will help you gauge what you must do and identify which areas need improvement. Listed are five main components that determine your credit score. 

1. Payment records and history affects your credit score. Ensure that you have a reputable payment record by regularly paying your bills on or before the deadline. 

2. What you owe considers how much all the amounts you owe and the number of accounts you have. Fully used credit cards and high balances lower your credit scores. 

3. If your credit report card indicates longer times you pay right, you may be rewarded with higher scores. 

4. Account types that you have is also a factor that affects your score. Try having different accounts like installment loans, retail cards, home loans, etc., to boost your numbers. 

5. New activities and the recent opening of new accounts may indicate troubles that lower your score. 

Wrapping Up

Think of your credit score as your school report card grades. If your grades are higher, you can attract more companies that can hire you. The same system applies to your financial standing.

Your credit score reflects how much of a reliable payer you are. Of course, you would not want to have complications when you need to purchase something or get a loan for a major necessity. 

Pro tip? Be patient with getting your scores higher. It is not an overnight task. It will take time and effort to earn the trust of lenders.