Credit scores are important whether you are applying for a credit card or a loan. No individual or company would be comfortable doing business with you if they can clearly see that your credit history is not reputable.
The FICO credit score takes different factors into account when calculating the figure for you. Therefore, if you wish to improve this number, you need to pay attention to how well you are taking care of the things that are taken into consideration when calculating the credit score.
Let us quickly sum up what these factors are and how you can ensure they have a positive effect on your overall score.
1. Timely Payments
Making all the payments on time will keep your credit history in a really good shape. It establishes that you are a reliable person who takes care of all the bills responsibly. Like you make general payments like securitas epay & myambulancepayments u also need to make credit card payments.
You will be able to see a clear positive change in your credit score once you start making timely payments. On the other hand, making continuous late payments will bring your score down quickly.
If you have issues remembering when a bill is due, start to set in a reminder over the phone or on a calendar. Another way is to schedule automatic payments to ensure you get the job done timely every month.
2. Clear All Pending Debts
Pending dues look like a big red flag when you are applying for a loan. It shows that you are under a financial burden and may not be able to pay off the loan later.
Therefore, it is best to clear off any debt that might be shown on your credit report. Although it will not suddenly fix the damage especially if the debt has been there for a long time, but it will boost your score over time.
3. Maintain a Low Credit Utilization Ratio
This is by far the most important factor that affects your credit score. If you don’t know what credit utilization ratio is, we will explain the concept to you in simpler words.
A credit score comes with a limit that you can utilize. Exceeding the limit means you owe the bank more than the amount that was initially promised. If you want to make sure that your credit score does not suffer, it is best to stick to a credit utilization ratio of 30%.
Let’s assume you were allowed to spend $100 in a month. You only spend $30 to maintain a good utilization ratio and also made a timely payment to bring your limit back as soon as possible.
This would be the best approach to maintain a great credit score in the long run!
4. Don’t Apply For Too Much Credit/Credit Cards
Application for cards or loans results in a hard inquiry. This is a check that the bank or lender will carry out on your credit report to make sure you qualify for the product or services.
Multiple hard inquiries can make your credit score take a dip. Although this effect fades with time, the inquiry stays on the report for more than a year and negatively impacts the outlook of your credit history.
5. Dispute Any Flaw You Find On The Report
The authorities producing your credit reports may be using tonnes of tools in doing so but they are still humans who are prone to making mistakes. It frequently happens that a wrong entry on your data brings down the credit score.
We encourage our readers to keep a constant check on their reports. You can access a free credit report at least once in the year which is sufficient to see if there have been any inaccuracies that could drag your scores down.