A Professional Guide On How to Boost Your Credit Status

Written by: April Lunar
06/03/2019

credit-status

Financial institutions use your credit score to determine the amount of credit to give you and how likely you are to repay loans. As such, it is a crucial factor in your life. The higher your credit rating, the more likely you are to qualify for credit cards and loans, which will save you cash in the long run. 

If you are not proud of your credit history, you are not alone. You can improve your credit rating, although it is going to take sometime. The sooner you correct issues that drag your credit down, the faster your credit rating go up. There a couple of steps that you can take to increase your credit rating such as paying debts on time, creating a track record of paying bills and so forth.

How Credit Scores are Determined

You probably have hundreds of credit scores because credit rating is arrived at by using mathematical formula to the data in your credit reports. There is no universal algorithm that all lenders use- they are different, depending on the company in question.

You do not need to worry about having many scores due to the fact that these factors affect your credit rating in different scoring models are the same. Factors that affect your credit score will always remain the same, it all depends on the degree. 

Most rating models factor in your credit cards, payment history on loans, the age of your accounts, the amount of revolving credit that you use often, how often you apply for credit, and the types of accounts that you own. So, how do you improve your credit score? Here is what you can do:

Stay Current With Your Payments

Try as much as possible to ensure your debts are always in the green so that lenders know you are responsible. The Experian reports that most lenders focus on payment history when determining credit scoring. So, your credit rating is a strong indication of your ability to repay debts. A payment history of timely payments shows that you are able to pay your future debts. 

Do Not Apply for New Credit Cards Yet

You should not take new credit card as long as you are in credit repair mode because this can hurt your credit rating. Furthermore, a new account will lower your aggregate credit age.

Do Not Close Your Accounts

You can easily close your credit card accounts that are no longer in use, but do not bee quick to do that. Make sure a given account will not affect your credit negatively. For instance, if you close your account while it has some balance, it can negatively affect your credit rating. Closing an already existing account will not improve your credit rate. Notably, leaving your account open can benefit your credit rating, if you make consistent payments. 

Ask For Forgiveness from Your Credit Score

It is not bad to call your creditor to ask for forgiveness for paying your debts late or missing on payment. Many lenders offer payment protection deals for their customers. Make sure to check if the plan is available for you. These protection plans offer several payment forgiveness or forbearance, more so, if you have changed your career recently, want a month off from payment, or had a baby. Keep in mind these plans have price tags, and some of them are very high. 

Do Not Bounce Checks

Insufficient fund checks are not usually seen on the credit report unless they have gone through judgment or legal process. If your check bounces, you have to pay bounced check fees to every stakeholder in question. This can be expensive, if you do not have sufficient income. 

Pay Your Dues On Time

When companies analyze your credit history and ask for a credit score from you, they want to know how dependable you are when it comes to pay your loans because previous payment reports is viewed as good projector of future performance. Paying all your bills is one way to influence your credit scoring factor. Late payments or missing out on payments can negatively affect your credit worthiness.

So, make sure that you pay your bills on time and any other type of loan that you may have such as student loans and car loans, phone bills and other utilities. Make use of other tools and resources at your disposal such as calendar reminders, automatic reminders and so on to make sure that you pay your dues.

If you are not current with any payments, make them current as soon as possible. While late or missed payments indicate negative data on the credit card the impact declines after some time. 

Make Sure You Time Your Application Keenly
When you apply for loan, a hard inquiry is made on your report and this negatively affects your credit rating. The effects of hard inquiry can take up to one year and the inquiry on the credit report for up to 2 years. Check your probability of getting an approval on credit application before you make any application because you do not want your credit score to be denied.

In addition, you should not apply for multiple credits within a short period of time or before applying for a bigger loan such as mortgage. When you are looking for personal loan, auto loan or mortgage, you can reduce hard inquiries by making comparison within a short time. Applying the same kind of loan within an interval will appear as one hard inquiry. The duration varies between 14 and 45 days. 

Monitor Your Credit Performance

When you monitor your credit, expect a soft inquiry, which does not affect your credit performance in the short term. The data in the credit report will allow you to see your financial accounts in a single place. In addition, monitoring your credit status will help you identify signs of identity theft. 

Monitoring how your credit performance after evert several months will help you know how well you are managing your credit status and if you should make any adjustments. 


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