Lenders will use your credit score to determine how much of a risk you are.
Most consumers will have three credit scores, and these come from TransUnion. Experian and Equifax. These three main credit bureaus track your credit information and give lenders a report to look over, and determine how risky it is to lend to you. This score helps lenders evaluate how likely you will be to pay back your debt on time. This score can determine not only if they will lend to you but also how much it will cost you and what options you will be presented with.
If you are trying to increase your credit score, then you need to know that you won’t be able to do it quickly. We are going to show you a few tactics you can use to boost your score, but they won’t work the same way for everyone who uses them. There are lots of different variables in play here, and while they may not all work as effectively, they do all work. You will see improvement if you implement them.
1. Don’t get rid of old credit cards.
Your score is affected positively by having older aged credit accounts. While you may want to toss out old cards that are paid off, if the accounts are still active and they aren’t costing you anything, then it’s a good idea to hold onto them. The negative marks against you on your credit report will go all the back to seven years ago. It’s a good idea to have some positives there to offset them. If you don’t have many old accounts, then you look like a new borrower, which in itself is risky to lenders.
2. Keep older accounts open.
You may think that your credit score will improve once you close older accounts, but it can do quite the opposite. Your credit score is partially determined by the ratio of how much debt you have to how much credit you have available. You may not have much debt left once you close some of these accounts, but you have to consider how much credit you have available as well. That can factor into how high or low your credit score is.
3. Decrease your balances and keep them low.
You should also be paying on your accounts whenever possible. It is ideal to have all your accounts using below 30% of the available credit limit. Any card that has a higher spending percentage can look bad on your credit score.
4. Pay on balances, even if the payment is late.
It is worse to completely miss a payment than it is to pay late. If you pay less than 30 days after the due date, the late payment won’t be reported to the credit bureaus, so make sure you pay before then.
5. Pay all your bills on time.
If you can go a long time without making a late payment, then that reflects well on your credit score. If you have missed bills, or paid them late, and have done so recently, then this has a major negative effect on your score. It is only with time that the severity of its effect wears off. You can make your mistakes look less severe by paying on time from now on.
6. Look for errors on your report and dispute them.
There may be items on your credit report you aren’t aware of, such as late payments you don’t remember being late with. These could be mistakes, and if you think you have found one, then you should dispute it. Removing these errors can boost your score almost instantly.
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