A credit score is a number that refers to your ability to take credits and pay for them, as an individual. It’s based on your current credit situation, based on the income, expenses, and other debts that you have. It’s considered an important factor for both the borrowers and lenders, especially when the amount of the new credit is determined. The factors that influence the credit score are your active bank accounts, total debts, repayment history, and the current ability to pay the monthly rates regularly. In the USA, it’s represented by numbers between 300 and 850, as the lowest and highest scores respectively. Also, the type of the new loan, and older ones, can influence the credit score.
Even though it seems like just a simple number, it affects your financial status. The lenders make decisions for you based on this score. In general, scores higher than 700 are considered excellent, and the borrower can receive lower interest rates, which means less money spent until they pay for the whole loan. It may vary from one creditor to another, which means sometimes, people with scores between 600-700 may get great conditions for repayment too. Many people think it’s not the best option, since those who need the money urgently, need to pay higher interest rates, besides they are already considered poor. But, that’s how the system works. The good thing is that we can all work these things out, and increase our credit scores.
A good credit score gives you better rates on your loans and mortgages, as you are considered a low-risk borrower. A low credit score can affect negatively your ability to rent a property, or even buy life insurance. So, probably you realize how important is to get this thing done before it affects badly every aspect of your life.
In this article, we will talk more about improving your credit score, so you can fix that right on time.
1. Have a saving plan
Saving money will eventually help you pay your debts with lower interest rates. Many people confirm that if they use a service like BrightMoney, they are getting financial plans that help them get out of the unpleasant financial situation and improve their credit score. Bright can help you boost your credit scores by making smart credit card payments, always on time and optimized to save you from high-interest charges. Bright’s MoneyScience™, a system of 34 algorithms, studies your finances and finds the smartest and fastest way to get you debt-free.
So, let the AI help you figure out the best way out. The advanced algorithms are powerful enough to calculate everything you need and manage your finances wisely.
2. Check on your credit reports
You must always know what’s happening inside your wallet. That will answer your question, why your credit score is that bad. You need to take a copy of your reports, so you can review them, alone or with your accountant. See what’s lowering the score, and see if there is any way to prevent that. This is the only way to spot the issue. Review all your older bank accounts, and the credits you have already paid, and see if you have some missed payment, that makes you look like a criminal to the lenders. Check what you can pay immediately, and do that as soon as possible. Your credit score will improve soon after that.
3. Pay all the bills on time
We should all do this. Be careful about how much time you have to pay for the bills, and try not to go over the due date. The impact of unpaid bills is really high on your credit record. Even if you pay for it two days later, the case will stay on the report for up to seven years – and we are sure you don’t want that. So, if you pay your bills regularly, your credit score will stay higher for a longer time. Set reminders, so you won’t miss a bill. It’s better to save money from the salaries so you can have bills, instead of waiting for the next payment, to cover them.
4. Check the reports from errors
It’s so easy to make a mistake. But, sometimes, even the tiniest mistakes can cause big trouble for the people. Review all the reports, and dispute the errors. You have a right to review every report, from every bank or credit bureau. This doesn’t happen often, but it’s not as uncommon as it seems. Make sure you do this on time, so they may have time to correct the report.
Other important things to be aware of
These are the main four things you can do to boost your credit score instantly. Furthermore, you can try not to move too often, because banks and lenders prefer “stable” people. It’s not crucial, but it can be important for your credit score situation. If you have older bank accounts, keep them open, so you can appear relevant to the lenders. Closed old accounts are something they consider as risky and make you appear less serious, even if you are an adult with a full-time job and regular income. The USA credit scoring model rewards you for your active accounts – which can be weird for the rest of the world, but that’s how things work here.
Also, you have an option to use a credit builder card, which is not the most elegant solution, but it helps you rebuild the credit score step by step. We suggest hiring an accountant in cases like this, so you can both figure a way out of the current situation.
It’s really important to improve the credit score because that’s how the banks and lenders decide if they let you borrow money or not. Keep in mind that every lender may have different criteria and rules, so be ready for that. Some of them accept lower scores, and others don’t find higher as good enough. But, you need to do everything you can, to change that. Review the current reports, and start improving them right now.