Having good credit in life is needed to enjoy a better life. Regardless of whether you are trying to get a cell phone or a new house, your credit is going to impact the decision. In many cases, the higher your credit score is, the more likely you will be approved.
If your score is low and you want to change it, it is not going to happen overnight. In fact, it will more than likely take months to see a positive impact, so starting as soon as possible is a good idea.
The following are a few tips to help you improve your credit score.
1) Checking Your Credit Report
One of the first things you will want to do is to look over a copy of your free credit report. Every 12 months you are allowed to get a copy from all three major credit bureaus. In fact, these can be downloaded directly to your computer or you can have them mailed directly.
Once you have your credit report in hand, scan through it for obvious errors. One mistake or inaccurate listing could have a negative effect on your overall score. The following are a few of the most important aspects to look over for mistakes:
•Social security number
If you find a mistake on your report, you need to report that to the bureau as soon as possible.
2) Pay Bills On Time
One of the most significant aspects of your credit rating is the ability to pay on time. This is why it is essential to keep all of your bills paid in a timely manner. Having a strong history of current bills shows lenders that you are a reliable borrower.
One of the best ways to ensure that your bills remain current is to set up automatic payments for all of your accounts. If automatic payments are not available in your area, you should consider placing all of your payments on a calendar to keep track of them. You may also want to consider creating notifications on your mobile phone to help you stay organized and remind you of upcoming payments.
Examine Your Credit Utilization
Another 30% of your score is determined by your credit utilization. In simple terms, credit utilization is the sum of all your credit balances divided by your total credit limit. As an example, if you are carrying $10,0000 of available credit and have a $4,000 balance, your credit utilization is 40%. Having a much lower rate will affect your score in a more positive manner unless that score is 0% Credit Karma released research that showed the average credit score of a person with a 1-20% credit utilization is higher than those with a 0% rate.
The majority of scoring models in the industry encourage a rate between 1 and 40% to have the best impact on your score. If your ratio is higher than 40%, you may want to consider implementing the following strategies.
•Check Your Balances On A Weekly Basis
•You might even want to set up balance alerts with your credit card company to ensure you are not going over your limit.
•Try to make more than one payment a month to help you get ahead of payments and interest charges as well.
•Do not use just one card for all of your spending, distribute it evenly.
•Do Not Close Your Old Accounts
Just as your employment history never goes away, the same is true with old credit card accounts. When you close accounts that were in good standing they will actually harm your credit score under certain circumstances. If you are unemployed you should be able to get credit from some companies. It’s possible to get a loan with no job, but you just have to be sure you are able to pay it back.
The credit utilization rate has the possibility to increase which will reduce your overall credit. For example, if you close an account that a 2,000 credit line, your $10,000 total available credit would be reduced down to $8000. This is going to increase your utilization rate, which in turn will lower your overall score.
In addition, it also has the possibility to decrease the average age of your accounts. Some credit scoring models employ a technique where they take the oldest and newest forms of credit and use that as an average. As you can see closing good accounts that are not in use will do more harm than good to your credit score.
Be An Authorized User
One of the best ways to increase your own credit score easily is to become an authorized user on someone else's account. In order to become an authorized user the primary account holder simply needs to add you to their account. Once you are added, the card's activity will be reflected on your own account.
To get the best results for this, you will want to find someone who has an outstanding credit score. It is important to remember that everything, whether good or bad, will show up n your account.
When you are trying to improve your credit, the most important thing that is required is time and patience. Trying to rebuild your credit score is going to take time. However, once you see the effects of your hard work, you will be motivated to continue working toward a higher score.
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