Current Date: 22 Feb, 2024

How to improve your credit score

Your credit score is significant. A good credit score helps you have a greater chance of being accepted for loans at the best terms. It will also enhance your ability to get credit cards, mortgages, mobile contracts, and more.

Your credit circumstance will determine the specific activities that can be taken to raise your credit score. However, specific general measures can improve virtually anyone's credit.

Read Also: The Importance Of Building And Maintaining Good Credit

5 tips for Improving your credit score

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Here are five tips to improve your credit score;

Build your credit history

If you have a credit history, it may be easier for businesses to evaluate you, which could damage your credit score. Young people and people new to the country frequently experience this issue. 

You can make some efforts to improve your credit history.

Pay regular bills on schedule

An excellent method to demonstrate to lenders that you are a dependable borrower and capable of handling credit responsibly is to pay your debts in whole and on time each month. 

Old, properly maintained accounts will often raise your score, though you should study the possible effects of unused credit cards.

Maintain a minimal credit utilization

The amount of your credit limit that you have used is known as your credit utilization. Your credit utilization is 50%, for instance, if your limit is £2,000 and you have spent £1,000 of it.

Typically, lenders frequently see a lesser percentage favorably, which raises your credit score. Maintain a credit utilization rate of at least 30%.

Check for mistakes and note any on your report

Even little errors, like a misspelled address, might lower your score and cause a lender to deny you credit. By examining it, verify that your credit report's information is accurate and current.

If you find a problem, contact the supplier and request that they fix it. Suppose there is negative information on your credit report that is accurate but occurred under unusual circumstances (such as being hospitalized for a while or losing your job). In that case, you can add a Notice of Correction highlighting this to your credit report.

Read Also: The Pros And Cons Of Credit Cards

Consider obtaining a credit builder card

A credit builder card can assist in rebuilding your credit score if you're trying to increase your credit rating. They often have high-interest rates and minimal spending caps. 

Your credit score could briefly decline when you initially receive a credit card. However, if used correctly, it can eventually raise your score.

They can be helpful if you utilize credit builder cards for a limited monthly expenditure (on necessities you'd buy). Then, to prevent paying interest, pay off the card in full and on time each month.

Read Also:Understanding The Basics Of Budgeting

Why do I need a high credit score rise?

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When applying for credit, the lender will choose whether to lend to you by looking at your credit score. Typically, it is based on data gleaned from your credit report and the specifics of your application.

If you have previously been a customer, they may already have your data. Depending on the information they access and their lending requirements, each lender may use a different formula to determine your credit score.

You are more likely to be given credit if you have a higher credit score and loan, mortgage, and credit approval since businesses will view you as reduced risk. A good score shows a history of appropriately managing your credit, such as paying any required repayments on time.

Additionally, you can have a greater selection of credit options and suppliers, which can help you save money. Your credit score may also impact your interest rates on top of your insurance premium if you spread the insurance cost over a year.

This might make it easier for you to complete tasks like home renovations or car purchases quickly. However, as the record gets older, the effect of any missing payments or defaults is likely to diminish. They will be completely removed from your report after six years.

How Much Time Does It Take to Rebuild Credit?

There is no specific time frame for restoring your credit. The factors damaging your credit and your actions to repair it will determine how long your credit scores will rise.

For instance, restoring your credit score might take little time if you keep your account current and make on-time payments following a single missed payment. It will also take longer to catch up if you repeatedly miss payments on different accounts and fall more than 90 days behind before paying up. 

If the result of your late payments is a repossession or foreclosure, this effect may be considerably more pronounced. However, the significance of a poor score will gradually fade in both scenarios.

After seven years, most negative marks disappear from your credit reports and stop affecting your scores, if not earlier. You can take the actions outlined above to proactively contribute positive information to your credit reports in addition to allowing time to assist you in rebuilding your scores.

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Excellence Chukwuma Chukwunaedu

Excellence Chukwuma Chukwunaedu

I enjoy marketing, technology and business. I help businesses and brands connect with their ideal customer profiles and build products that excite them and solve their problems.