Knowing how to increase your credit score can help you significantly when you want to buy a car, rent an apartment or get a loan to start your own business. Many people think that their credit score goes up and down depending on their payment history, but in reality, it depends on different factors.
These below-mentioned four tips can help you understand how to boost your credit score in a short amount of time.
Get a Copy of Your Credit Report
The first step is getting your credit report. This will show what you owe, how much of that has been paid off, and how many inquiries there have been on your report. The next step is paying down debt. Remember, the lower the amount of debt you have, the higher your credit score will be.
Next, always make payments on time. If you miss a payment or are late with one payment, it could take up to six months for it to drop off your credit report. Once again, this may mean the difference between a good and a bad rating.
Check for and Dispute any Errors
The first step is to do a quick review of your credit report. Look for any mistakes, errors, or outdated information. Once you find an error, contact the credit bureau and file a dispute. It will be on the credit bureau to correct the mistake or prove that it’s accurate.
This can take some time, and sometimes, many people end up filing disputes with all three major bureaus at once in order to speed up the process. Moreover, if you find any errors in your credit report, you can always consult a credit correction attorney to get your credit report fixed and keep your record clear.
Lower Your Credit Utilization Ratio
There are two types of credit scores: a FICO score, which is used by lenders like banks and credit card companies, and a Vantage Score, which is used by retail stores. The most common way of boosting your credit score is to lower your credit utilization ratio.
It is the percentage of the amount you owe that is being used. For example, if you have a $1,000 balance on one card with a $3,000 limit, your credit utilization ratio is 33%. Even this score is considered as high. So, you should try and keep it under 10%.
Make Payments on Time
If your payments are on time, it can improve your credit score by making you look like a dependable borrower. Also, having a good credit score makes it easier for you to get approved for loans, which is great if you’re looking for a new car or home.
Since lenders want to know that they will be paid back, don’t use your credit cards unless you have the money to pay them back right away.
If you want to help build up your score over time, then try paying off as much of the debt as possible each month so that it doesn’t accumulate and make it harder for you in the long run.