How To Improve Your Credit Score, Tips & Advice

A good credit score means good opportunities for loans, more credit limits for cards, and more rewards. Improving your credit score is necessary when you make use of these services. Be it a credit card, loans, or anything of that sort, your credit score is the key to getting the best options out there. Whether you have an existing credit history or you are starting to build one, there are some tips that can be helpful to you in building, improving, and maintaining a good credit score. Let’s start by addressing how you can start building a credit history and get a good score from ground up.

Building credit history from ground up

As you might already know, to have a credit score you need some credit history. For that you need to have used a loan or credit card in the past. “But wait, we need credit score to avail a credit card or a loan”. Yes, it looks quite contradicting. However, you can get a credit or a loan if you can show that you have a stable monthly income, and then by paying off the loan or credit card bills, your credit history starts building and your credit score is calculated. If you can’t show a proof of stable monthly income, the best option to start building a credit history is to apply for a credit card against a security deposit. This means, you keep a certain amount of money in the bank as a fixed deposit, and the banks issues you a credit card against that. You usually get a credit limit of 70% of the total amount you deposited in such cases. From there onwards, you can start using the card and paying it off every month regularly, which helps you build a credit history and improve your credit score.

What counts in your credit score?

• Your payment history is the major factor affecting your credit score. Whether or not you pay on time, if you pay the full amount due or the minimum, or somewhere in between, these things count for almost 35% of the score.
• The second major aspect is the amount of credit you use. There is a credit limit that you have according to your score. If you exceed that limit in usage, it adversely affects your score and you are considered a high risk borrower. Usually a safe borrower is considered to be someone who uses less than 30% of their total limit. This aspect is responsible for around 30% of your overall score.
• The duration of your credit history also counts for 15% of the score. The longer your credit history has been, the better the score will be.
• Credit mix is taken into consideration for 10% of the score. Credit mix means variety of credit services you use such as credit card, different loans, etc. Having multiple elements in your credit mix is an advantage, as long as you make timely payments, of course.
• New credit also accounts for around 10% of the score. If you apply for a new credit account, it can be an advantage for your score. However, if you apply for multiple accounts in a short span of time, you will be considered a risk.

Scrutinize your credit report

You can request one free report from credit bureaus every year. Make use of if and get your credit report. Review it carefully and see if there are any mistakes. There are chances of false information getting into your credit report. Reviewing your report should help you identify if there is such a mistake so you can notify your agency and get it rectified. If your credit score is damaged, try to repair it by paying off the pending bills and not using credit until you do so. There are reputed online services such as Velocifin | top rated credit repair & business funding company that can help you repair your credit score, as well as identify and challenge mistakes if any.

Pay your credit card bills or loan payments on time

Improving and maintaining a good credit score is always much easier than repairing a damaged credit score. Thus, it is advisable to pay off your dues before due date every month. Below are a few tips for the same that can help you improve your credit score consistently.

Set reminders for your payments

Set reminders for your monthly credit card or loan payments on your phone, using your planner, calendar, whatever that you use. Making sure that you don’t miss the date is very important. It’s better to always try and pay the bills before the due date. Timely payments of bill every month consistently can increase your credit score over the span of a few months.

Try to pay more than once per billing cycle

Your billing cycle is usually every month when you have to pay the credit card dues. However, if you can afford it, try to clear the dues more than once per billing cycle. If you pay monthly, you can try paying every two weeks. Doing so will minimize your credit utilization which plays a key role in improving your credit score.

Clear maxed out cards first

If you use multiple credit cards, pay the bills for the one that you maxed out first. Even if you didn’t max out any, pay the bills for the one where your usage was closer to the overall limit. This is to make sure that your credit utilization stays low. Like mentioned in the previous point, if you can manage to pay more than once per billing cycle but only for one card, pay the bills such that credit utilization stays low on all your cards.

Your credit mix

Your credit mix also plays a part in improving your credit score. It means credit services that you use such as credit card, different loans, mortgage, etc. Having multiple elements in your credit mix helps. Adding another element to it also improves your score as long as you manage to pay all the bills on time.

Quick loans

If your credit score is low and you can’t find any other ways, your last resort can be to apply for quick loans. These loans are usually small amounts like anywhere from $250 to $1000. Pay them on time as their repayment history is reported to the agencies. This can become a positive aspect in your credit report and help you avail other offers from where you can start improving the score.

Consider applying for 0% interest credit cards

There are credit cards that only charge you fees while the interest is 0%, provided by some companies. The catch is, only the people with very good credit score can be eligible for such cards. These type of cards can help you maintain a good score. They are only available for a fixed period of time, but can be helpful. Velocifin is one reputed service that, as mentioned above, helps you improve your credit score or repair a damaged credit score. Along with that, they can also help you qualify for 0% interest credit cards.

Keeping these things in mind and taking careful steps can help you improve and maintain a good credit score.