Improving the Credit Score
A credit score tends to be one of the most important factors of your life where the finances are concerned. A lender can decide whether you are apt for the loan required by this knowledge of your credit score. This can help them determine if the repayments of a loan will be done on time on a regular basis by the borrower. A high credit score ensures you can get a loan a t a low interest rate with a low down payment. This is obviously saving of ‘good’ money.
In case you find that the credit score is on the lower sides it is wiser to take remedial action to rectify this at the earliest. This ensures a comfortable tension-free life. Listed below are few tips which can be followed for the improvement of a low credit score.
1. Checking the Credit Report:
Before you take any steps for the improvement of your credit score it is advisable to check and re-check the credit report. This can give you a clear picture what needs to be rectified. This needs to be carried out annually. You can seek the help of professionals who are qualified to study different credit reports and help you in improving the credit scores.
2. Setting up bill payment:
The payment history makes almost 32% of the credit report. The credit score can improve to a large extent if you ensure that the bills are paid on time on a regular basis. Setting up the payment to automatic ensures there are no chances of you missing out on any payments.
3. Balance low:
Big balances can cause havoc to the credit scores even if the bills are paid on time. You need to ensure that the charges are limited to less than 30 percent on the limit of the card.
4. New Credit Cards:
Make sure you do not opt for any new credit cards if this is not required. Before opting for a new credit card ensure you compare the different rates offered by the various companies before making a choice.
5. Avoid closing:
Closing accounts of old credit cards can damage the credit score. This is in accordance to a statement by the FICO.
6. Avoid any new Credit:
Applying for credit tends to create an inquiry on the credit report and too many inquiries can lead to a disaster with the credit score. These inquiries are there on the credit report for a period of almost 2 years.
Time taken to rebuild Credit score:
In case of any negative information like public record item, late payments or inquiries on the credit report you need to wait after making sure that the bills are paid on time. There is nothing to be done for a bad credit score except waiting and ensuring that the bills and other payments are made on time regularly.
The time taken to improve the credit score depends on the type of negative information on the credit report.