One of the most important measures of your financial health is your credit score. At a glance, it helps lenders determine how responsible you are with your credit. If you have a good credit score, it will be easy to get approval for new lines of credit and loans. It will also open the door to lower interest rates and give you access to credit card bonus offers. Therefore, it is vital to find out how to improve your credit score.
What Is a Credit Score?
This measurement determines how likely you are to honor a loan on time. It is a scoring model that uses information from various credit reports. The scoring model employs amathematical formula to produceyour score based on these data sources.
Typical Factors That Make Up a Credit Score
- Current unpaid debts.
- Bill-paying history.
- New applications for credit.
- How much of the available debt one is using.
- The types and number of loan accounts one has.
- Whether one has debts sent to a collection.
- Period of one’s loan account.
- Whether one is going through a bankruptcy or foreclosure.
Improving Your Credit Score
Are you looking for tips to help you improve your credit score? If so, there are several simple ways to do so. Some tips that can help you achieve a better credit score include the following:
Build Your Credit File
Are you considering opening a new account? If so, you should build your credit file. That is especially important because the major credit bureaus require credit core reports before advancing money. So, as a borrower, start by laying down a good record.
Having several active and open accounts in your name can also be helpful. These could include secured cards or credit-builder loans if you have a low score or are just starting. Having a good reward credit card with no yearly fee can also help improve your established score. You can also build your credit file by becoming an authorized user on a family member’s or friend’s credit card if the person uses the card responsibly.
But if you have no records or credit files, get a credit report from a bureau. To know how to go about it, consult experts who will advise you and guide you on how to build your credit score.
Do Not Miss Payments
Another essential factor in improving your credit score is your payment history. Having a history of making payments on time will help you achieve a good credit score. Essentially, you need to ensure that you do not miss credit card payments or loans for more than one month. The last thing you want is for your credit provider to submit a report that will lower your credit scores.
Honor Past-due Accounts
Are you behind on your bills? If so, you need to bring them current as soon as possible. Doing so can help improve your credit score. Having all your accounts current can help your credit score for years. A late payment can remain on your account for more than five years. Hence, bringing your accounts to date is a good place to start.