One way or another, credit scores can have an impact on your life. It predicts your credibility in terms of finances and repaying your debts. Your credit score determines whether you can borrow money, use a credit card, or even get the house you want.
A high credit score opens up more credit opportunities and privileges. Not to mention the lower interest rates. Borrowers with credit scores of at least 750 often have various choices, including the potential to qualify for 0% home financing and mortgages with 0% initial interest rates.
For young adults, a low credit score may get in the way of achieving personal goals. Luckily, there are simple ways to boost your points.
Ways to Improve Credit Points
To begin with, a low credit score means that there’s more room for you to improve in. On the other hand, those with a fair and high credit score will only need to maintain their status. If you want to rebuild your profile, here are some methods that you can do:
1. Timely Payment of Bills
If you often pay your bills late, there’s a stiff chance for you to improve your credit score. Why? Delayed payments may linger on your credit reports for more than five years. More so, payment history is the single most crucial element that could impact your credit ratings.
If you miss a payment by more than thirty days, it is best to contact the creditor right away. As much as possible, make arrangements to clear your records. In the process, you can ask for reconsideration of reporting late payments to credit bureaus.
2. Improve your Payment Frequency
Have you heard about micropayments? These are small payments that you make. It plays an important role in keeping your balances low. Making numerous payments throughout the month affects a credit score element known as credit usage. It establishes your capacity to repay debts, thus, increasing your credit score.
3. Increase Your Credit Limit
When your credit limit increases but your debt remains the same, your total credit usage will decrease. This technique will help you improve your credit. If your salary increased or you’ve added more years of good credit, you have a good chance of acquiring a larger limit.
4. Dispute Errors in Credit Reports
A mistake on your credit report could cause your credit score to become lower. Fixing it as soon as possible can help you boost your credit score rapidly. If you notice a sudden drop in your credit score, make sure to check your records for mistakes. You can do so by requesting your creditor for your reports. After verifying them, it is easy to file a dispute on those errors and ask for their removal.
5. Be an Authorized User
Are you starting and have a thin credit file? You can stack up against your credit history and get more on your records by being an authorized user. If you have relatives or friends with a responsible credit background, you might want to consider asking to be one of their authorized users. This way, their credit usage will reflect on your records, too.
6. Secure Your Credit Card
Whether you’re starting from scratch or improving your credit, a secured credit card can come a long way. With this card, you pay in advance what is generally equal to your credit limit. It works through cash deposits, yet you can use it just like a regular credit card. It records your purchases as timely payments, which will help boost your credit score.
7. Keeping Your Credit Cards Open
If you’re trying to raise your credit score, consider that canceling credit cards might make things more difficult. When you close a credit card, you are removing your credit limit on that account as well. It affects your total credit usage calculation, which might result in a low credit score. As much as possible, keep the card open and use it regularly to avoid the issuer from closing it.
8. Mix Things Up
Are there any credits that you still don’t have? Try applying for those so you can diversify your credit mix. Creditors may find your profile more credit-worthy if they see you have various installment accounts and revolving credits.
Making The Right Choice
Are you planning to be a homeowner anytime soon? Don’t let your credit score get in the way of reaching your dreams. Several mortgage options do not require high credit scores. Aspiring home buyers can apply for USDA loans. These are home loan programs for those who want to own a house within the rural area.
In this day and age, many credit providers offer flexible and affordable payment solutions. Perhaps, one of the most crucial aspects of adult life is deciding which provider to trust. With the right mortgage broker, you can own your dream home in no time.