Your credit score is a measure of your ability to manage debts. The level of your credit score determines how easily you can get loans and what kind of loan terms you get. Having a high-credit loan is advisable, but if you still need to, you can always improve it.
Green Sprout is committed to providing resources to help you make the best financial decisions for your future. Green Sprout has answered five interview questions below that tell you everything you need to know about improving your credit score.
Why Should You Have A Good Credit Score?
Your credit score is an important indicator of the state of your financial health. It lets lenders know your financial habits concerning credits.
This influences your ability to get approved for loans, especially with good terms such as low-interest rates. Your excellent credit score will improve your rates on auto loans, mortgages, and other finances.
What Is Considered A Good Credit Score?
Using the FICO model that most lenders use, a credit score of 850 is considered a good credit score.
What Are Five Tips To Improve Your Credit Score?
One of the ways to improve your credit score is by reviewing your credit reports. Checking your credit history lets you know what is helping or hurting your credit score. Some factors hurting your credit score may include; high credit card balances, missed or late payments, judgments, collections, etc.
Factors that are improving your credit score include low credit card balances, a history of early settlements, older credit accounts, minimum inquiries for new credit, a mixture of different loan accounts and credit cards, etc.
Take Better Control Of Your Bill Payments
Most lenders use FICO scores to make their lending decisions, and FICO scores are affected by your payment history, credit usage, age of credit accounts, new credit inquiries, and credit mix. Your payment history impacts 35% of your FICO score, so you must make payments on time.
30% Credit Usage Or Less
Your Credit Usage is measured by the amount of your credit limit used per time. It ranks second on the list of factors affecting your FICO score with a 30% influence. You must ensure that you consistently pay your credit card balances monthly to improve your credit usage scores. If you cannot meet up with that, you must ensure that your outstanding balance is 30% or less of your total credit limit.
Limit Your New Credit Requests And Hard Inquiries
The best way to check your credit score is by making a soft inquiry that will not affect your credit score. Hard questions and new credit requests will affect your credit score adversely, so limit them.
Keep Old Accounts Open
The older your credit account is, the better. So, you shouldn’t close old accounts. This is one of the most effective credit card hacks you can utilize.
How Often Should You Check Your Credit Score?
It is necessary to check your credit score to prevent errors regularly. You should do this through personal credit score checks to not hurt your score. You can also scan through some banks’ free credit monitoring services to receive alerts if your credit score changes.
Do Credit Repair Services Work?
There is no magic to repairing your credit score. Thus, you have to be wary of any service that advertises instant credit repair or any other offer that is too good to be true.