The endeavor of improving your credit score is not a sprint, but a full marathon to cover. A good credit score will help individuals to qualify for the loans with a low-interest loan and also get pre-approval for premium credit cards, but this takes time if you’d already fallen into the pitfall of impaired credit. In this article, we will discuss tips on how to improve your bad credit score to a reassuring score.
To start the journey, you have first to check your credit score to analyze your current status. Once if you get a clear insight as to how much room out there for you to grow, then use the below tips to start building your score.
The 7 key steps to improve your credit score
- Always stay on top of your pending payments
- Keep a close tab of your credit utilization rate.
- Leave the old debts on your credit report.
- Using a credit card like Firestone Credit Card
- Leverage the specialized credit score boosting programs.
- Properly time your applications for credit building.
- Be patient and persistent.
1. Stay on top of all your payment
You have to try hard to keep all your debts in the green zone always to reassure the lenders that you are credit responsible. Payment history is a crucial factor for any scoring systems like Vantage Score or FICO. One’s credit score is the reflection of his or her ability to repay the debts reliably. From the lenders’ point of view, established a credit history with timely payments is the right indicator to trust you with your initiative to handle future debts responsibly.
2. Keep a close tab on the credit utilization rate
Try to weight your balances in relation to your credit limit and ensure that you are not using the available credit in full. Exhausting the credit limit all the times is considered to be an indicator of risk, which you should try and avoid. The higher your ration goes up, the fewer the points you may earn in that category, and the scores may start to suffer. Utilization of credit is a major category which influences your score. The ideal rate may vary based on different scoring systems.
For example, in FICO scoring systems, close to 10 percent lesser than the credit limit could be set as the optimum target. However, people who have the highest average in FICO scores are close to 7 percentages to the credit limit. On the other hand, Vantage Score, the ideal target utilization is about 30 percent below the limit. As per experts, defaulting to 10 percent may still keep in a comfortable zone for both these scoring platforms.
3. Leave the old debts on the report
Once some get rid of an educational loan or paid off your car loan, people are impatient to try and get it immediately wiped off the. However, as long as your payments remained complete, those reports will actually help to enhance your credit score. This is true in case of credit cards accounts too.
Any credit account which is paid off in full is a reassuring thing on a credit report; however, the closing of an account is not something with the debtors should do by default with the hope of getting a positive impact on their credit score. On the other hand, maintaining an account with a solid history and track record of paying off the bills on time is what creditors always want to see on your report.
However, any bad debts which may have an adverse impact on your credit score should be removed at the earliest. The bankruptcies may stay on your credit reports for 10 years or more. The late payment or delinquencies like repossessions, collections, settlements, foreclosures, etc. may remain for seven years.
4. Using a Firestone credit card
Now, a Firestone credit card comes with a lot of add-on perks, which can help the bad credit scorers also to improve their scores over time. Along with many purchasing benefits, Firestone credit cards offer deferred interest on Firestone and Bridgestone products too for a period of six months. You can enjoy a better APR also and what makes Firestone the favorite choice of may is the generous credit limit they put forth.
There is no annual fee also for Firestone credit cards, and it offers a 22.8% APR. The daily transactions of up to $149 are also granted with a deferred interest for 6 months. You have to pay the balance in full in the specific time period, or else there will accumulate interest to paid, calculated from the very first day of purchase.
5. Leverage score boosting programs
The average age and the count of your credit accounts are the major factors which give the lenders feedback about your debt handling capacities and creditworthiness. So, these elements may leave an impact on your credit history. Ultra FICO and Experian Boost are two major programs which allow the customers to boost their things credit profile with other important financial information.
After opting for a program like Experian Boost, you can then connect your banking data also and let the credit bureau to add the utility payment history and transactions to the report. Programs like Ultra FICO will let you enable permissions to your banking data as savings and checking accounts to be considered alongside the report while calculating the scores.
6. Time the applications carefully
Each time when you apply for a line of credit, there could be a hard inquiry which is pulled on to your report. Such a report may temporarily lower your score. The effect of such a hard inquiry may last for six to twelve months. You can research on the likelihood of the approval also to make sure that you are an ideal candidate to see if you are eligible rather than taking up the unwanted risk of lowering your credit score with a denied application.
7. Be persistent and patient
Remember, once impaired; you cannot raise your score overnight. Maintaining long-term good credit habits and persistent financial planning is the only way out, for which you have to work patiently and persistently on building your credit score. The two influential factors which go into your credit score are the average age of the information and the oldest account out there on your report.
Overall, one needs to establish good credit habits as like paying off the left out account balances on time and keeping the overall utilization rate to a minimum to improve the score. Apply for further credit only when you need it and also by ensuring your application can be approved by the potential lender.