LOS ANGELES – June 11, 2021 – (Newswire.com)
Your credit score determines your eligibility to borrow money, and a lower than average score can make it harder to get a loan or line of credit when you need it. Fortunately, there are many easy ways to improve your credit score. Here’s what you need to know about how your credit score is calculated and how to increase your score fast.
What Makes Your Credit Score?
Before trying to improve your credit score, it is important to understand how it is calculated. Your credit score is a numeric value between 300 and 850. If you have a higher credit score, you have a better chance of being approved for more loans. While there are several ways to calculate your credit score, FICO is one of the most commonly used methods.
Your FICO score is made up of:
Payment history (35%): Regularly making on-time payments increases your score, and frequent late or missed payments can lower it.
Use of credit or amounts due (30%): The more available credit you use, the riskier lenders will think you are. Plan to use less than 30% of your available credit to earn points here.
Length of credit history (15%): Lenders view a longer credit history more favorably. It pays to keep lines of credit open, even if you don’t use them all the time.
New credit (10%): Plan to apply for new credit only when you really need it to maintain that high score.
Credit mix (10%): Lenders like to see a mix of credit, like credit cards and installment loans or mortgages. You don’t have to have all types of loans, but keeping all of your debt in one area is frowned upon by lenders.
How To Quickly Improve Your Credit Score
Now that you understand how your score is calculated, you are ready to create a plan to increase your score. Try one of the options below to generate a quick increase in your score.
1. Check your credit report for errors
Mistakes or mistakes on your credit report can lower your score for no good reason. You can check your credit reports for free with each of the three major credit bureaus (Experian, Equifax, and TransUnion) every 12 months.
If you find an error, you’ll want to immediately report it to the credit bureau and the creditor who provided the information. It may take a long time to resolve, but you will see an increase in your score once the errors are corrected.
2. Apply for a higher credit limit
One of the key factors in determining your credit score is credit usage, or the percentage of credit you are using over the amount you have available. If you have a balance of $ 500 on a credit card with a limit of $ 1,000, your usage is 50% (500/1000 = 0.5 = 50%).
Now suppose you contact the company that issued the credit card and they agree to increase your limit to $ 1,500. Within minutes, you are now at 33% usage (500/1500 = 0.33 = 33%). Receiving a credit limit increase can improve your credit usage and increase your score.
3. Catch up on late payments
Payment history is the highest percentage of your credit score, so updating accounts and making payments on a timely basis is one of the best ways to improve your score. It may take a while for creditors to report this information and for you to see a change in your score. But trust the process and remember that making payments on time and in full will pay off in the end.
The bottom line
Improving your credit score will not happen overnight. After you make corrections and put effort into getting your credit back in order, you will likely start to see changes in a few months. Examine your credit report, request credit limit increases if necessary, and make payments on time. Following these 3 simple steps can help you start improving your credit score fast.
Notice: The information provided in this article is for informational purposes only. Consult your financial advisor about your financial situation.
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3 Easy Ways To Improve Your Credit Score Quickly