5 Easy Ways to Quickly Improve Your Credit Score
Try the Credit Score Calculator >
You want to improve your credit score, whether to access new credit, lowering your interest rate, or getting a bigger loan? If you want a good credit score, you obviously have to pay your accounts on time for an important period to prove to financial institutions that you have the will to reimburse your loans. However, that can take time and luckily the credit score is not only influenced by that. There are faster ways to improve your credit score, and here are 5 quick easy actions to increase your rating:
Pay your past dues in order to bring your account on time
Having some current past dues seriously affect your credit score, especially if it is been 60 or 90 days late. It can bring down your score by hundreds of points, even though you have a good historical record. It is critical when you are about to apply for credit, that you adjust your accounts and show them without any past dues. Let's face it, banks won't lend money to someone being currently late on his regular payment, something says here that he is having cash flow issues and wants to pass this problem to the next lender.
Fix your collection accounts
Collection stays for a long time on the credit bureau, and sometimes, you don't even remember how they got there in the first place! Again, this is an aspect that affects considerably your credit score, and you want to make sure to get rid of it. Contact the credit bureau agency and the party in which you have an issue, and resolve it. Getting rid of them will increase your score in no time.
Lower considerably your balance on your credit cards and line of credit, preferably lower than 30% of the total limit
You didn't know? Using your credit up to the limit has a negative effect on your credit score, so don't go to the bank asking to lower your limit thinking it would help. Instead, let your financial institution increase your limit and try lowering your balance on your current revolving credit. This will show that you are not using all of your revolving credit. Lowering your balance under 50% of the limit is good, but 30% is even better, this will right away increase your credit score. But be careful, the extra room on your line of credit or credit card is not made to make new purchases; you want to keep it low to maintain a higher score.
Keep your old accounts open
The older your account, the more positive impact it has on your credit score, but it has to minimally stay active. If you haven't used a credit card or line of credit for a long time, the algorithm of the credit score might just ignore it. So in order to increase your rating, bring it back to life. Just use your old credit card for your next payment, but make sure to clear off the balance after.
Avoid applying for new credit
Every time you apply for new credit, it shows on your credit bureau and lowers your score. For that matters, make sure you stay away from new credit application. Taking a step back from any new credit application for a good period of time will make sure to slowly increase your score as time pass, especially if the 4 previous tips are followed.
An old saying in credit says that banks will lend money only to people who do not need it, which is not false when you are looking for low interest rate. These 5 tips will give this impression to financial institutions, and therefore increase your chance of borrowing. You could even be accepted for a loan without being noticed, and perhaps at a lower rate, if they have an automatic credit response that takes decision only based on the score, and this, after just having a few weeks of good credit experience.
If you haven't done so already, check your credit score!
Try the Credit Score Calculator >