Do you want a better credit score? It can bring you plenty of financial opportunities. So, here are 3 tips to improve.
Making Paying On Time Your 100% Habit
Your credit score will always be significantly influenced by our payment history. For FICO and VantageScore.1, it is the payment history that is the factor that has the most influence. You can either opt for automatic payments or use your calendar to set reminders to ensure you are always a step ahead of payment dates. All bills need to be paid on time, whether they are for utilities, your house rent, your cell phone bill and so on.
How does a late payment a few years ago affect things? It is true that delinquencies (late or missed payments) can stay on your credit report for seven years, however, as time goes by the impact lessens. After two years the majority of negative items have little effect on your credit score – so patience is key here as well as continuing to make payments on time and you will soon be on the road to a great credit score.
Keep A Regular Eye On Your Credit Score For Inaccuracies
Your goal of having a great credit score can quickly be ambushed if you are affected by identity theft or reporting errors. If you sign up to Upgrade’s Credit Health you can get a free credit score, monitoring and tools to educate yourself on credit ratings. Get your credit report – all major reporting agencies offer this free, once per year.
If you find that there is an inaccuracy in your report you will need to take steps to dispute the error – this may be a written dispute letter to each of the three credit bureaus (TransUnion, Experian and Equifax).
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Once you have been successful in disputing an error how can you expect your score to be affected? This can vary. Ashley Adams-Mott at the Nest.4 notes that other factors within the same category are going to affect how much a dispute impacts on a credit report. He adds that if there are quite a number of undisputed late payments in your credit report you will see less change in your score when you dispute an inaccurate payment than if your record had previously been spotless.
Adams-Mott says it will usually take around 30 days for a reporting agency to investigate a disputed item and once it has been resolved the impact will be immediate (like when you give proof that a late payment is an inaccuracy) or long-term (like when you successfully prove that various new accounts noted on your credit report were opened falsely in your name).
Take On A Strategic Approach To Closing Accounts And Starting New Debt
A credit scoring model will take into account your outstanding loans and your total credit card balances according to Loanza US. In general, if you have low debt your score will be better.
Making a loan application can also impact your score as the proposed lender will need to carry out a ‘hard inquiry’ on your credit for each application. When your report shows a high number of hard inquiries it can indicate that you may be trying to take on more debt that you are able to cope with – this is no good for your credit score.
That being said, don’t be afraid to apply for debt when you need it even though your score will be affected in the short-term. Keep in mind that you are building good credit so that you look attractive to lenders (like when you are hoping to get a low interest mortgage rate to buy a house). You can keep your credit score strong by giving constant evidence that you are a borrower who always pays on time.
As a last point, don’t needlessly close old accounts. The available balance helps your credit utilization ratio as well as the fact that older accounts boost credit scores.