How to improve credit score: tips and tricks

How to improve credit score: tips and tricks 

If your credit score is not what you want it to be, then you are not alone. This article will give you insightful tips and tricks on how to improve your credit score. 

What is my credit score? 

Credit score is a three-digit number lenders use to help them decide how likely it is they will be repaid on time if they grant you a credit card or loan. It is a numerical expression based on a person's credit files which represents your creditworthiness. Higher credit scores increase your chances of qualifying for loans and credit cards. So, it is very important to calculate your credit score regularly. 

How to improve your credit score? 

Improving your credit score may take some time, but sooner you address the problem behind your low scores, the faster your credit score will soar. When you get your scores, the factors such as payment history, credit history, debt amount, etc affecting the credit scores are also mentioned. The faulty factors need to be addressed to improve your credit score. 

If you want to apply for a personal loan, or simply want to improve and increase your credit score, 

focusing on following actions will improve your credit score rapidly.

 

Step 1- Pay your bills on time 

How reliable are you in terms of paying your bills largely reflects on your credit score performance. Paying your bills on time positively influences your credit score. Late bill payments result in negative credit scores. Tools such as automatic payments or reminders to ensure timely payment of bills. 

Step 2- Pay your outstanding debts on time 

Whether you have an auto loan, credit card loan or any other type of debt, pay the installments on time as it will prove to the lenders that you are trustworthy. To lower your average credit utilization ratio, pay more than the minimum amount. A good credit utilization ratio, i.e., is calculated by adding all your credit balances at any given time and divided by total credit limit, ratio should be less than 30 percent. 

Step 3- Be careful with your credit cards 

Credit cards are just as much of a curse as they are a blessing. Be careful before applying for new lines of credit if you don’t need them. Keep your unused credit cards open-as long as they are not costing you money in annual fees-is a smart strategy. Closing a credit card increases your credit utilization ratio so if you don’t have an annual fee, keep your credit card open. 

Step 4- Review any inaccuracies on your credit reports 

No matter where you get your credit report, you need to review it carefully breaking down everything that is influencing your score. Review all the negative credit score factors and resolve them quickly. 

Step 5- sign up for credit counseling services 

Credit counseling is provided by certified financial non-profit organizations. Usually, these organizations will work with your creditors on your behalf to negotiate a debt management plan as well as guide you with your debt handling. Know more about how to improve your credit score quickly.