How can you improve your credit score?

Are you thinking of applying for a personal or home loan? Or just want to ensure that you have got a good credit score? You might be looking to increase your credit score fast. Well, that’s not as easy as sipping your coffee while sitting on a couch.

Your credit score will depend on multiple factors, including your payment history, credit utilization, the amount owed, and a lot more. And a good credit score will not only bring quick loan approvals but also, will make your financial life much more convenient. 

Why is it important to have a good credit score?

A credit score is typically a three-digit number. It showcases your creditworthiness. This is the first thing that a lender will check if you apply for a loan.

Your credit score will give them an idea if you will be able to re-pay the borrowed amount. In fact, a good credit score will reduce your interest rates and will eventually raise your credit card limit. Furthermore, a good credit score will help you be eligible for lower insurance premiums.

Additionally, your good credit score adds good weightage to your visa applications. 

Useful ways to Increase your credit score:

Here are a few things you can start doing to take initial steps to increase your credit score:

• Maintain accurate credit reports: The credit reporting agencies gather all your credit information from the different organizations. These organizations will be the ones where you have open accounts like banks, private lenders, utility companies, and even your credit card information. While you try to increase your credit score, you should always ensure that your report contains the correct information. In fact, you can request your credit report from the agency once a year for free. Once you get the report, you should check if there is an error.

• Analyze your risk factors: You get the report only but not the credit score on receiving the annual credit report. However, if you want to keep a check on your credit score, we suggest you get the paid credit report that also reveals your credit score. A credit report generally considers about three hundred risk factors. You can predict your risk factors and take the right actions in the sectors that need improvement. For instance, sometimes, it may appear as a risk factor if you don't have a mortgage. Hence, it would help if you take preventive measures regarding these risk factors to increase your credit score fast.

• Make sure you pay your bills on time: Approximately half of your credit score hinges on your bill payment history. So, it would be best if you pay for all of them on time every time. Because if you delay a payment, it will probably appear on your credit report for more than five years. Even though its impact will decrease with time, however, the bad impression remains there.

• Manage your credit utilization: Credit utilization is another significant factor that influences your credit score. The credit reporting agencies don’t get deep down to your debt-to-income ratio; instead, they will analyze your credit utilization. In fact, to increase credit score fast, you will need to have a credit utilization of 10% or even low. 

• Get a credit card if you still have not: Using a credit card in the right manner can work magically to help you increase your credit score. Getting a credit card and paying all the bills timely will be a positive point in your payment history. This will eventually mark a good impression on your credit report.

• Avoid taking too much debt at one time:  You should prefer to take the minimal loan in a specific time period. In fact, you should avoid taking multiple loans at once to increase your credit score. Instead, we suggest you re-pay your previous loan and then take the other one. Re-paying a loan at once and then taking the other one will give an unbelievable boost to your credit score. This will protect your credit score from going to the lowest value. All this is because taking more than one loan at a time will indicate that you might have insufficient funds. This will eventually make your credit score fall further. 

Wrapping up

The credit score ultimately tells all about your financial life. However, keeping a good credit score doesn’t mean you don’t borrow any funds. Instead, it would be best if you borrowed a perfect mix of credits, which will eventually strengthen your credit score. All the steps we have mentioned above will help you to increase your credit score fast. However, you can’t expect a boost in your credit score overnight. Instead, it will take a few months to improve your credit score.