A high credit score is dependent on a variety of factors, including timely payments, low credit card debts and a mix of old and new credit accounts. However, some factors can lower your score, such as late or missed payments, collections, and judgments. There are simple and free ways to improve credit scores.
Being punctual
Making timely payments is one of the key factors to building good credit scores. FICO states that your payment history is responsible for about 35% of your credit score. It is essential to pay at most the minimum monthly payment on all your bills.
Payment history
One of the most influential factors in your credit score is your payment history. Your payment history is responsible for 35% of your total credit score. Lenders can see your payment history to determine how likely you will be to pay on time. It is the most important aspect of your credit report, so it is important to pay your bills on time. Even a few late payment will not ruin your credit rating, so it is important to make an effort.
Credit utilization ratio
How to calculate credit utilization is the first thing you need to know about credit utilization. Your credit utilization ratio measures the amount of credit that you have used minus the amount of available credit. This figure will help you determine your level of debt management. The best credit utilization ratio is less than 30%.
Diversifying your credit mix
Diversifying your credit portfolio is one of your best options to increase your credit score. Although it is important that you have a balanced credit portfolio, it is equally important to not use too much of your credit. A healthy credit mix should consist of both installment loans, and revolving funds.
Get quick loans
You can get quick loans to help in emergency situations. It can take a few weeks before you get the money that you need. These loans are not as risky, but can take weeks to obtain approval. Another option is to borrow money from your friend or relative. This is a faster and more expensive option than traditional loans but it is also cheaper. It is important to remember that you will have the obligation to sign a loan arrangement. It is a good idea to have an emergency fund, so you can quickly borrow money when you need it.
Collection accounts or charge-offs
Your credit score can be affected by charge-offs. Generally, they stay on your credit report for seven years. Fortunately, you can take steps to rebuild your credit and get back to a high credit score. These steps may be slow but can make a big difference to your credit report.