In this article we are going to talk about the How to Increase Credit Score? Credit Score is a figure, which normally ranges from 300-850 depicting the worthiness of credit of a customer. More credit score implies more attraction for borrower. A credit score is maintained as per the history of credit. It depends upon number of open accounts, level of debt, and the payment history of the customer. Maintaining your credit score might sound a difficult task but it is a cinch task if we take into consideration few small tips.
How to Increase Credit Score?
There are numerous ways on how you can increase your credit score and how you can keep a check on the credit score.
1. Try to pay your bills on time
Paying bills is always a troublesome job. Remembering the due dates and complete the payment before it is difficult. However, while calculating your credit card score, one of the main and crucial points that is considered is the payment history. However, this might seem too basic but is does affects, your credit score a lot. Timely payment of bills can increase your credit score quite well in a very short span of time or a few months. Paying your bills on time helps, you maintain a good credit score to a very high extent. Set up timely reminders to avoid missing the deadline of the bill payment so that there is no stress of forgetting or delaying the bill payment and boost up your credit score. Lenders always analyses your credit report and assess your reliability in paying your bills.
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2. Avoid having a due more than 35% of your due limit
Do not maintain a due of amount which is greater than the 35% of your maximum due limit. As, doing so will affect your credit score negatively. Even if you pay all dues on time each month, still this will affect your credit score and your credit report if it is above 35% of your maximum limit. So it is better to keep a check on your transactions and make note that you do not exceed this limit to avoid unnecessary loss overall.
3. Do not close your credit cards
If you are competing to improve the credit score, be very careful before closing credit cards as this might make the competition more difficult for you. Your credit card history affects your credit card score so try not to close your credit cards even when you use them less, because having a long history in an old credit card might actually affect your credit card score in a positive way. So avoid closing your credit cards. If you have an unused credit card, it is a better choice to put it aside and forget instead of closing it as this way it will help you increase your credit card score as you will have a long transaction history.
4. Pay off debt on time
Paying off debt affects your credit card score by a huge percentage of 30% that means that if you pay off your debts on time then it will definitely help you increase your credit card score. High pending debts can badly influence the credit score of a customer. Try to pay- off your debts more than once a month, maybe fortnightlyEven if you have a bit difficulty doing this, remember this that in the end the credit points that you will gain would definitely be worth it.
5. Do not apply for new credit cards too frequently
Though keeping your old credit cards is extremely beneficial does not imply that you need to keep applying for new credit cards and start storing the older ones. This is because each time you make a request for accredit card, there are some queries followed in the process of issuing new credit card. Soft queries like your income and background does not affect your credit card score but too many hard queries affect your credit card score negatively. These hard queries include all loans taken under your name and all the credit cards you already have under your name.
Research about yourself and the history to ensure that you are an ideal candidate before applying for a new credit card else it might create problems for you. So make sure you unnecessarily do not apply for new credit card or instead do not apply for a new credit card until there is an actual need.
6. Become an authorized user of someone else’s credit card
Yes, becoming an authorized user on some other person’s credit card actually helps you increase your credit score as their transaction history will be an addition to your transaction history which will help you have along transaction history henceforth help you gain more credit score. You can always ask a well- known friend or a family member to add you to an existing credit card as an unauthorized user. However, this might affect your credit card score negatively as well if the other person does not pay bills on time or handles their credit card too carelessly in any way. In co- signed accounts the other user is equally responsible for the payments so try not to delay such payments, as this would have a reverse impact on the credit score. So make sure you do this after thinking about this aspect and find an appropriate person for this.
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7. Check the correctness of Credit Reports
Credit report is a descriptive breakdown of a consumer’s history of credit, which is made by the credit bureau. It collects the financial details of an individual and creates reports on the basis of the collected information. Lender’s always use these reports along with other inquiries of financial background and other details of the loan applicant to check its reliability. Always keep a check of the credit reports and tally it. There is a probability of errors in the report which could lead to a reduced credit score, hence, rechecking the credit score will always aid you maintain a good credit score.
If there are any discrepancies try to get them rectified and you get some real good credit score with a little bit of awareness. Pointing out a negative entry or a dispute in the report after making a complaint the credit bureau deletes it from the report and the customer gets improved credit score.
8. Reduced Credit Utilization Rate
Higher limit but same balance always gives a positive impression. The fraction and the relationship between credit card balance and the maximum limits is a major factor, which plays a vital role. At the same time, it lowers the overall credit utilization as well. There is a varying score system which a lender may use to analyze the credit score. The utilization rate could vary from 7-30%.
9. Creation of Credit History
If a customer does not have borrow history at all, as a consequence you will not have a credit history as will which will result in a poor credit score. You must also ensure you borrow a decent amount of credit, which could be both secure as well as unsecure loans, which could be for short or long tenure thus helping you to bring a strong credit score. It allows you to access low interest rates and large amount of loans in the coming future whenever you need a loan for personal purposes. Every action requires patience. These steps are efficient in increasing your credit score but they take time. Credit score does not increase within some days, it might take 6 to 12 months for improvisation in your credit scores.
10. Contact your Creditors
Being in constant touch with your creditors could be of great help for a customer. Sometimes, you might face delayed payments due to missing of deadlines or some financial issues when you cannot afford to pay your monthly bills. Addressing this problem and informing the creditor about the problem with elaborate description can ease the adverse impact or the consequences of the due payments on the credit score and other pending payments. The creditor might aid you to remove all such negative entries from your credit report in order to maintain a good credit score if you repay it in full with a full proof written document. This tactic depends upon your relations with the creditor.
Credit score of a customer depends on his actions and his relations with the creditor. A customer must always act intelligently and with appropriate presence of mind to deal with difficult times when he is unable to pay his debt and enhance his credit score. Following the deadlines has always played a crucial role in all the fields and it is the scenario for credit cards. Nobody likes too much of debt, therefore, one must always try to maintain a healthy balance between his debts and credits. Too much off debt can lead to drastic consequences in terms of mental stress and financial burden. Be a little cautious and forever free of worries and an enhanced credit score for your benefit.