5 Easy Ways to Quickly Improve Your Credit Score
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Do you want to improve your credit score? Is it because you would like to obtain new credit, lower your current interest rate, or obtain a bigger loan?
To have a good credit score, you must pay your accounts on time, and have to have been doing so for a period of time as a way of proving to financial institutions that you have the will, and are committed to, reimbursing your loans. Nevertheless, there are other faster ways to improve your credit score.
Here are 5 quick and easy actions that can help increase your rating:
Pay your past dues and bring your accounts up to date
Having past dues in an account can seriously affect your credit score, especially if it is 60 or 90 days late. It can bring down your score by hundreds of points, even if you have a good historical record. It is critical, when you are about to apply for new credit, that you adjust your accounts, pay off the debt, and show them clear of any past dues. No bank will lend money to someone who is currently late on a regular payment, ultimately proving he has cash flow issues, and intends to simply pass on the problem to the next lender.
Fix your collection accounts
Collection accounts can stay for a long time in the credit bureau, and sometimes, you don't even remember how they got there in the first place! They can affect considerably your credit score, so you want to make sure you get rid of them. Contact the credit bureau agency, and the party with whom you have an issue with, and resolve it. Getting rid of these will increase your credit score in no time.
Lower considerably the balance on your credit cards and lines of credit (preferably under 30% of the total limit)
You didn't know? Using your credit up to its limit has a negative effect on your credit score, so don't go to the bank asking them to lower your limit thinking this could help you increase you score. On the contrary, let your financial institution increase your limit, and try lowering the balance on your current revolving credit. This will prove you are not using all of the available credit. Lowering your balance to under 50% of its limit is good, but 30% is even better, and will increase your credit score right away! But be careful, the extra room on your line of credit or credit card is not for new purchases! You must keep it low in order to maintain a higher credit score.
Keep your old accounts open
The older your account, the more positive impact it will have on your credit score. The only catch is that it has to stay minimally 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 you have to bring it back to life. Just use your old credit card for your next purchase, but make sure to clear off the balance right away.
Avoid applying for new credit
Every time you apply for new credit it shows on your credit bureau and lowers your score. Because of this, make sure to stay away from any new credit applications. Taking a step back from these for a good period of time will slowly, but surely increase your score, especially if you follow the 4 previous tips.
There is an old saying “banks will lend money only to people who do not need it.” These 5 tips will give this impression to financial institutions, and can help you not only increase your credit score, but increase your chance of borrowing. You could even be accepted for a loan without being looked into, and perhaps even at a lower rate (mostly if they have an automatic credit response which decides only on the score given) and this, only after having a few weeks of good credit experience.
If you haven't done so already, check your credit score here!
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