How To Get A Good Credit Score?

It is imperative to determine how one can build, maintain, and improve his/her credit score.

Credit score is one of the most crucial indicators in the eligibility that lenders, landlords, insurers, and other entities, who are willing to grant you credit or trust you, would take into consideration. It helps to improve your chances of being allowed credit cards, loans, financial products, and services from organizations at lower interest rates. On the other hand, having a low score increases the cost of borrowing and may lead to not being able to get credit and loans. Hence, enhancing and sustaining a sound credit score is among the principal financial goals that you need to set. Read through these useful tips on how you can achieve and sustain a high credit score over time:

Three major credit bureaus provide credit reports and you should get a copy from all of them, at least once every year.

Before you start the whole process, you need to review your credit reports from each of the three major credit bureaus, Experian, Equifax, and TransUnion at least once a year. This enables you to check your credit reports for any entry that may be inaccurate or any fraudulent activity that is making your score lower. To challenge listed information as false, misleading, or fraudulent, send dispute letters to the credit bureaus involved. This means that your credit reports are updated only to reflect the borrowing behavior and credit history you are engaged in.

Always ensure that the balances that you maintain on your credit cards are low.

In the case of credit cards, make sure that your balances to credit limits are as low as possible, below the 30 percent range. Large balances can be a problem since your credit appears to be excessive and your credit limit or income is too small compared to the amount of money that you owe.

All payments to be made on the minimum amounts required should be paid on time

The following practices should be observed to ensure that one pays all their credit cards and loan, Every month all credit cards and loan’s minimum monthly payments should be made before the due date. Delays or defaults would be communicated to credit reference agencies and would prove very costly when it comes to credit ratings. Use an email or mobile application to make payment notifications by your credit card company or a bank to minimize the chances of missing the payment and the negative impact on your score.

New Credit New credit accounts opened should also be done sparingly

Every credit card application that one fills makes the credit reporting bureau make a hard inquiry, which results in a drop in the credit score. Therefore it should be advisable to refrain from applying for too many new credits within a brief period when you are not so desperate to open a new account that you will be rejected just because of a low credit score. It is imperative to note that many hard inquiries within a few months or even a year may be seen by lenders in a negative light.

Restrict the Overall Number of Inquiries towards Your Report

Do not just bother if your credit applications of any kind are damaging your score. This means even noncredit related inquiries as those that may be done by utility companies, landlords or insurers will be considered in your total inquiries meaning some points drop. For instance, it is advisable not to give out your Social Security Number or ask for quotes if you are not serious with your intention of buying something in the next few months or so. Some requests from such entities can still distort credit decisions, however, should there be numerous inquiries, then it will be an issue.

Raise Your Credit Limits

You can send a request directly to the customer service of the credit card or send a request letter to increase your overall credit limit from time to time if possible. Essentially, the more credit limits that exist across your cards, the less your proportion of credit utilization will be if you avoid escalating your balances. As credit utilization has the most impact on the credit scoring models, increasing the credit limit will have a positive effect on your credit score.

This means that you should not lose any of the cards that are not in use or which you have had no activity on for a long time.

Although it could seem wise to close an unused credit card, it is not advisable since it would raise your credit utilization ratio across the other cards and therefore bring down the credit score. The only reason to close a card is if you are being charged high fees, otherwise, it is wise to keep them since it helps in retaining the overall credit limit. But ensure to make some transactions using such cards every few months to avoid inactivity closures.

Mix Types of Credit

Paying the greatest amounts diligently, using credit cards, retail accounts, installment loans, and mortgages would enhance your score than just having and using credit cards. Lenders consider multiple credit mixes as a plus since it shows that one is a responsible user of credit and that they are capable of managing different kinds of credit. Therefore, it is not advisable to have a new loan just to introduce a credit mix – think about whether you need the loan and if you are capable of repaying the monthly installments.

In conclusion, ensure that you proofread your report to eliminate all the possible mistakes that might have been made.

Apart from going through your credit reports in detail, you should also follow your free credit score periodically which can be accessed through any bank website or financial technology application. If the credit score looks uncharacteristically low compared to the previous years, then review the credit file for a possible reason for the dip. Challenge such issues to avoid delay and recover scores in a bid to counter the opponent’s moves. Subscribing for credit monitoring services also means that you will receive immediate alerts each time any activity that affects the score is observed.

Become an Authorized User

If you know someone who has a good credit standing in the credit bureau and has been paying his/her credit card bills on time, perhaps a relative, spouse, or friend, ask to be included as an authorized user of one of the credit cards. This will automatically mean that you can benefit from the good credit history of the primary cardholder because your record will reflect that of the primary cardholder. However, the concept of the authorized user is most advisable for those individuals who have relatively small credit records and a small credit history.

Associate with Creditworthy Individuals

This shows that even with a small association with people with high credit scores the outcome is always advantageous. For instance, in the future, when planning to get an auto loan or mortgage, and if you do not have enough credit history on your own, become an authorized user of the credit card of a family member or spouse with a good credit rating to improve the chances of loan approval and better interest rates. Over some time, as you build your credit record in terms of what you can independently pay the financial institutions will find it easy to approve an application based on your merits.

These handy tips and timely adopting the right credit behaviors before getting deep into any credit expectation are good ways to establish and sustain a sound credit standing across years. Do not rush with these score-boosting tricks and be persistent in applying them to have a possibility to get more favorable mainstream credit products shortly and several decades.

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