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Regardless of whether you are planning to purchase a new house, car or simply need a loan, you are going to need to have good credit. In addition, you can save a good portion of money on high interest if you have a decent credit score before you apply.
It is going to take time to build good credit, however, that should not stop you from starting today! Here are simple tips to help raise your credit score.
Pay Off Debt Fast
One of the best ways to improve your credit score is by paying debts off as quickly as possible. This is going to help to factor that heavily influence your credit score: the credit utilization ratio and payment history. The payment history will reflect the payment of bills on time, while the credit utilization is calculated through the division of debt by available credit.
Additionally, the amounts owed section found on the credit report is updated on a monthly basis. When you drive down that balance, you will see an almost immediate impact on your credit rating.
According to a financial advisor from San Jose, the lower you have your credit to debt ratio, the better it is going to be, as this accounts for 30% of your credit score. As we have already discussed, this can be lowered by simply paying off your debt. However, you can also lower it by increasing your available credit.
Begin by talking with your credit card issuer to have your credit increased. Ask if there will be a hard pull on your credit as this will lower your credit rating by a few points.
Become An Authorized User On Another Individual’s Account
Another simple way to see an increase in your score is by being added as an authorized user to someone else’s credit card, ensuring that the card will be used in a responsible manner. If the other individual racks up large balances or misses payments, this is going to bring your score down as well, so this can be a rather risky plan. However, it is just as risky for the primary holder as well, they are liable for any balance you charge and do not pay.
Pay Off Balance Monthly
It is impossible to build credit if you do not use it. Many people believe it is best to have a credit card but never use it, only for emergencies, however, this will not help to build solid credit. If you do not plan to use your credit card, it is wise to try and use it for small purchases on a monthly purchase and pay the balance off at the end of the month. If you are able to keep a low balance and never miss payments, you will begin to add a positive mark to your payment history, which is one of the most important aspects of building good credit.
Credit Boost Services
It is important that you take care in the services that you sign up for that claim to raise your credit score, due to the fact that many are scams. However, the credit bureaus use baking data in an effort to calculate scores, which may help to boost your rating as this provides a general picture of your finances. Services such as UltraFICO or Experian Boost do help to improve your credit score when you bank responsibly and pay bills on time. However, it is important to understand that not all lenders will take these credit scores into account.
New Credit Cards
This is not the best option for everyone, as creating new balances or missing payments may hurt your rating. However, if your debt to credit ratio is too high and you are unable to obtain a credit line increase, a new card could help. This is going to increase the amount of your available credit, while decreasing the debt to credit ratio.
However, this will result in a hard pull on the credit report, which is going to take you down a few points. You can also get an online payday loan without a credit check. This is a temporary impact and your score will recover in a matter of months. If you are looking at the long term, another credit card could be beneficial. However, if you are considering applying for a loan within the next year, it is best to hold off on any new accounts.
Remove Credit Report Errors
The is one other way in which you can improve your credit rating, you are typically entitled to a free credit report from each credit bureau on a yearly basis. However, it is now possible to check your credit on a weekly basis, as the bureaus have made reports free on a weekly basis until April 2021.
Take the time to look through the report and ensure that everything is accurate. Filing a hand-written dispute to the credit bureau if you want to remove items from credit report that you think are erroneous is one of the first step to correct your credit score. If that negative mark is removed, it is possible for your credit score to improve.
Remember, it is not possible to get good credit fast. However, there are actions you can take which can improve your credit at a rather rapid rate.