Your FICO score is a very important factor in your financial life. The higher your score, the more likely you are to qualify for loans and get approved for credit cards with favorable rates and terms. If your score isn’t as high as you’d like it to be, you’re not alone. Repairing bad credit scores or building credit for the first time takes time. There are no quick ways to fix credit score. In fact, you should beware of any quick-fix efforts, as most of them actually backfire. The best way to start rebuilding credit is to manage it responsibly over time. If you haven’t done that, then you’ll need to repair your credit history before you see your credit score improve. The following steps will help you with that.
1. Check Your Credit Report for Errors
Inaccurate or missing information on your report can drag your score down. You can check your credit report through all three bureaus: TransUnion, Equifax, and Experian. If you find any defects, you should dispute the information and get it corrected right away. Also remember that checking your own credit report does not impact your credit score.
2. Get Credit for Paying Utility and Cell Phone Bills on Time
Through Experian, one of the three credit bureaus, you can get your on time utility and cell phone bill payments factored into your credit score. This is an opt-in product where Experian connects users’ bank accounts to identify utility and telecom payment history. After a user verifies the data and confirms they want it added into their file, their FICO score will be immediately updated. Users can register for this service at Experian.com/boost.
3. Pay Your Bills on Time
This is one of the biggest factors contributing to credit score – making up 35% of the FICO score calculation. Missed payments, even by a few days can have significant negative impacts on your FICO score. If you have missed a payment, the best thing to do is to get current and stay current. Poor credit performance doesn’t stay with you forever. The longer you stay on top of payments after a mishap, the faster your FICO score will increase. The impact of past credit problems on your FICO score will fade as time passes and as good payment patterns start show up on your credit report.
If you have consistent trouble making payments on time or making ends meet, there’s options for help. If it’s offered by your bank, you can use payment reminders through an online portal. You could even consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your account. If your problem is having the funds to make payments every month, contact your creditors or consider a legitimate credit counselor. This will not rebuild your credit immediately, but seeking assistance doesn’t hurt your score. When you have someone help you responsibly manage your credit and make payments on time, your score will eventually rise.
4. Pay Off Debt and Keep Balances Low on Credit Cards and Revolving Credit
Credit utilization ratio contributes to 30% of FICO score’s calculation. It is calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. For example, if you typically charge about $2,000 each month and your total credit limit across all your cards is $10,000, your utilization ratio is 20%. To figure out your average credit utilization ratio, look at all your credit card statements from the last 12 months. Add the statement balances for each month across all your cards and divide by 12. That’s how much credit you use on average each month. Lenders typically look for a ratio of 30% or less.
It’s best to keep balances low on credit cards and other revolving credit, as high outstanding debt will have great negative impact to credit score. The most effective way to improve your credit score in this area is by paying down revolving (credit card) debt. Having fewer accounts but owing the same amount can actually lower your score. Try to come up with a payment plan that puts the majority of your budget to higher interest cards first, then maintain minimum payments on other accounts.
5. Apply for New Accounts Sparingly and Keep Unused Accounts Open
Unnecessary credit can actually harm your score in multiple ways, so don’t open accounts trying to have a better credit mix. Applying for multiple accounts can create too many hard inquiries on your credit report, which lowers your score. It may also lead to the temptation of overspending and high debt accumulation.
Many believe they should close any accounts that they no longer use. Actually, keeping these unused credit cards open can be a smart strategy. Closing accounts can increase your credit utilization ratio, and owing the same amount but having fewer accounts open can also lower your score. As long as they’re not costing you money in annual fees, you should keep your accounts open.
Personal Loans from TLC
Having a favorable FICO score can assist you in many ways. From helping you qualify for the best rates and terms, to increasing your chances of getting approved for a loan, to even paying less for insurance. Considering all the impacts your credit has to your overall financial well-being, it’s smart to do everything in your power to ensure it’s the best it can be. It’s also important to understand that things can happen and mistakes can be made. At TLC we will still help those with low credit scores.
Even with bad credit, Total Loan Company’s short-term multi-pay loans are a perfect way to respond to unexpected emergencies such as car repairs, medical expenses, or travel. When you take a short-term loan with us, the interest rate on your loan will depend on several factors including the type of loan you get, and your credit history. Will the loan interest rate stay the same throughout the life of the loan? Every loan from TLC has a fixed rate, which means your rate will not change for the entire term of your loan.
Once you have applied, the approval process is fast and easy; Once we receive your application, our customer service representatives will contact you to verify your income and employment, you will sign your loan agreement electronically and be all set to receive your funds. Once you have signed online, you’ll receive your loan in your bank account on the next business day.
And don’t forget, YOU ARE WITH A RELIABLE COMPANY:
- No Extra Fees, You Always Know What You Pay
- 24/7 Customer Support
- All Data is Fully Protected