If you’ve got a credit card, then this article is for you! Most people don’t recognize the value of having a credit score. A credit card is a blessing if you have got one. And the importance of having it is impressive as well. You get a lot of things for free if you just maintain them right. It shows your creditworthiness well. And to show that, you always have a 3-digit credit score on your account, which is based on several factors designed differently by each company. You need to figure out what to do and how to deal with it since it has several benefits that will be good for you in the long haul.
Some of these benefits include lower interest rates when applying for a loan from the bank and even better terms on credit products. You can also improve your chances for credit card and loan approval too since they will know how good your bendability is. It makes you a trusted client with your past rapport, eventually. You can also access pre-approved loan offers with it as well as great things for free with just your credit score. These free things include sponsorship with Airline travel, including flight tickets, restaurant bills, travel points, rewards, cashback, escape rooms like Wild goose Escapes, and so many more shopping experiences. And if you maintain your credit score well until the end, you might also be approved for a higher credit limit on your card. So, it’s a win-win in all cases!
To help you with your credit score and how to accumulate, build, and improve it, we’ve curated a list! So do check it out! Credit scoring model
Here are the nine quick ways to build and improve your credit score:
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CALCULATION POINTS:
Every credit score has a mechanism for dealing with the calculations as to how it’s done. Several of these credit scoring models are different in each credit bureau since they are designed differently on top of how they will be evaluated. Most are like the following- Payment History: 35%, Credit Utilization: 30%, Credit History Length: 15%, Credit Mix: 10%, and New Credit: 10% as a base. So, you’ve got to know the model for your bureau that you are trying to get to and then work with that by building on each factor that goes into conjuring up all that.
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PAY ON TIME!
Obviously, credit score means the bendability you have, so don’t screw that up, actually, and so just put up a good score by paying your bills at the right time and save yourself from the hassle already. This is essential advice.
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MAKE YOUR CREDIT FILE:
Making a credit file is extremely important. And for that, you’ve got to know your credit score and build on that, and then to improve it more; you can make a credit file. This means you will have various accounts under the same holder, which need to remain active to prove your credibility. You also gain excellent scores by being an authorized user on someone else’s credit card. This will show how loyal you are at various accounts, debt owners’ places, and even other account holders. This will also establish your credibility even more actually.
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BRING PAST DUES AS CURRENT:
If you have past dues that are left to be paid and are being delayed, ruining your credit score. You should be able to bring them current, as it will save your life since we all know that a balance left to be paid can be added up to your credit history for up to 7 years. So, it’s not safe to play with that. You can talk to the counselor and ask them to do so on your credit card debt, as they may be able to decrease your interest rate with this too.
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KEEP LIMITED ACCOUNTS:
Keeping limited accounts is necessary if you cannot essentially keep all your tabs active. Since inactive accounts are like gap years in Resume, it’s almost always never good for you or the employer, and you can’t do anything about it. You can have many accounts for your credit file. Still, after that being sustainable, you must be sure to limit opening up new charges since they may have a bad influence on your credit score as each time you apply, it becomes a hard inquiry of your history. It might even end up lowering your scores even. So be aware of that all the time, please. Your average account age might also decrease with opening a new one, so be cautious.
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CREDIT MONITORING:
This is the most crucial aspect of it all. So, you need to constantly monitor your credit scores, which will help you eventually realize your mistakes and exactly where you are making them. Several companies will easily make that happen for you. These three credit bureaus are very famous and essential as well. Its names are Equifax, Experian, or TransUnion. And these are updated monthly, and most banks report to these regularly.
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REBUILDING YOUR CREDIT SCORE:
If you’ve neglected your credit score for too long or maybe didn’t know about it, you need to start looking out for rebuilding it (which is basically another word for improving, really). These can depend on various factors. If you missed some payments or loan installments, you will have one month to build it back (considering that you only slip up once and regularly pay on time after that), or some constant pushbacks on your credit report that are larger can last up to 7 years. Also, bankruptcy can last up to 10 years. So, it’s really up to you what you choose to avoid and what you do on time to build it again.
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KEEP YOUR OLD ACCOUNTS OPEN:
Don’t close your old accounts that made your credit file. Not even if they are inactive and not used for any purpose since those can damage your take on your credit report and its score. If you’ve had an old relationship with your account, the more trustworthy you seem actually to the bank lenders that will give you a loan or other favorable benefits someday; it’s because this means that you’ve had a good long relationship with them that has lasted long. New account openers aren’t seemed trustworthy at all and cannot be able to be landed vast lumps of money right away. And this is the thing that also affects your credit score.
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STAY AWAY FROM REVOLVING ACCOUNTS:
You can almost always know that revolving accounts are not healthy for your credit score. Especially not paying their bills on time as well. Because having a high amount of balance/pending bills on your revolving accounts can mess up your credit utilization score here, and it’s essential to maintain it here. Also, keep your credit utilization score below 30% since this is the second most crucial factor in calculating credit score (1st important one is credit history), according to FICO. You can also increase your credit limit to lower your credit utilization score. People with high credit scores maintain their rates in single digits almost all the time.
Please add your added recommendations to the mix as well. Lastly, let us know your thoughts in the comments down below!
Author Bio: Charlotte Lin is a content creator at escaperoom.com. She’s a passionate young woman, a mother to an amazing nine-year-old, and an avid reader. Over the years, writing has helped her explore and understand the world and herself. She loves to travel, meet new people, and spend quality time with her daughter. You can find her on LinkedIn.
