5 Tips to Gain Better Credit
What your credit score says about you has the power to uplift you financially or bring you to your knees. The credit crunch has made lenders even more strict and just getting a credit card may prove tricky. Some years back, it was so easy to get a mortgage and nearly every person could qualify. This is no longer the case, and your credit score plays a significant role in determining whether you can even receive a mortgage.
It is, therefore, very important that you take measures that will help you to boost your credit to gain a better credit score and learn about credit repair. Here are some tips:
- Make Timely Payments - Paying your bills on time is very important if you want to maintain a good credit score. Thirty-five percent of your FICO score is calculated from payment history. FICO refers to the credit score that Fair Isaac developed, which many lenders rely on. The scores range from 300 to 850. Since current trends are given more weight when making the calculations, changing the way you make payments will shape what your credit score reads even if you did not make regular payments in the past.
- Repay Your Debts - Another important factor that is considered when calculating credit scores is the payment of debts. The credit utilization ratio, which measures the credit you owe against the total available amount is also key in maintaining a better credit score. What is given the most weight is the amount spent every month, not the amount of debt carried from one month to another. If you do not want to erode your credit score, spend just about 30% of your credit limit. It is even better if you can lower it to 10% only.
- Comb For Any Errors- Your credit report may contain errors that you should look out for. Although some errors will not really be damaging, some can have serious repercussions on your score. For example, a report about a false collection notice can easily take 40 points from your score. Therefore, make it a practice of getting a copy of your credit report and scan it closely for any errors.
- Piggy Back - If you have a limited or poor credit history, you can improve your score significantly if you become a piggy back on another person’s credit card. This simply means being an authorized user of the card. Of course, it only makes sense if the owner of the card has a good credit history. This can raise your score between 30 and 60 points. However, only use someone you know. Never use online services selling anonymous slots.
- Use Your Credit Cards - If you do not use your credit card for over six months, it is likely to get listed as an inactive account. The amount you spend does not matter so long as you keep using the card.
By using these top 5 tips, you should be able to obtain better credit as well as checking your credit report for erroneous data to help you with credit repair.
Image Credit: Credit Card (Morgue File)
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