Tips to Improve Credit Score Fast
Do you really want to get your finances in order? If you improve credit score fast, it can significantly help and brighten your financial future. But let us ask, do you know what a good credit score is? And why do they matter so much? Credit scores can seem mysterious for people unfamiliar with them, but they follow a few common principles. We discuss everything about credit score, including how to quickly increase it.
What is a Credit Score
A credit score is a number that creditors use to determine your credit behaviour, including the possibility that you will make payments on a loan. A credit report includes your credit score. It also includes a history of your credit, loans, and other financial information. These reports are used to calculate your credit score.
How to Get Your Credit Score
There are mainly 4 ways to get your credit score:
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Check the credit and loan statements.
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Talk to a credit or housing counselor.
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Find a credit score service.
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Buy your score from major credit reporting agencies: Equifax, Experian, or TransUnion.
How is Credit Score Calculated
As mentioned above, a credit score is calculated using a history of your credit, loans, and other financial information. The information from your credit report that affects the score is:
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Payment history
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Outstanding balances
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Length of credit history
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Applications for new credit accounts
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credit accounts like mortgages, car loans, and credit cards
The credit score is calculated using a proprietary formula like FICO or VantageScore that analyzes the above-mentioned reports.
The importance of Maximizing Your Credit Score
A good credit score influences all aspects of your adult life—from renting an apartment to getting a car loan. A low credit score can keep you from applying for a mortgage or even set up utilities without paying a deposit.
A good credit score comes from strong credit habits. A good score can begin as soon as you are 18. You should keep your credit score high by consistently making student loan and mortgage payments, and keeping your credit usage low. Having a high credit score can make it easier for you to get a loan, rent an apartment, or lower your insurance rate.
What is an Ideal Credit Score
As mentioned above, a good credit score is essential as it enables easier loan approvals and reduces insurance rates. Suppose you want to fix bad credit fast. But how much is a good credit score? The most commonly used credit score is the FICO score, ranging from 300 to 850. We break down the FICO score model in the following points.
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800 - 850: Exceptional
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740 - 799: very Good
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670 - 739: Good
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580 - 669: Fair
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300 - 579: Poor
How to Improve Credit Score Fast?
Do you want to rebuild credit after bankruptcy or improve your FICO score for any reason? The following tips can help with it; these tips are taken from books on credit repair.
Pay Your Debt Strategically
The first thing is to pay your debt strategically. For this, you can use the debt consolidation strategies. Debt consolidation refers to rolling multiple debts into a new loan or credit card to simplify financial obligations. You should also lower your credit utilization rate, which is the credit amount you’re currently using. The avalanche method and snowball method can help you settle all debts.
Get Higher Credit Limits
Although you did eliminate credit card debt, consider not using it regularly. This can require you to get a higher credit limit. If you do get a higher limit, use that to lower your credit utilization rate and improve your credit score.
Pay Everything on Time
The most important factor for credit reporting bureaus to use to determine your creditworthiness is whether you pay for regular expenses on time. It’s because a good track record shows you are more likely to pay a loan on time.
Keep Your Oldest Account Open
Closing a credit account means removing an entire credit line, which can significantly increase your utilization rate. Moreover, older credit accounts are a credit score factor and contribute to the average age of your accounts. Credit bureaus want to see that you have multiple accounts in good standing, even if they now have zero balances. A good strategy is to occasionally make small payments with these accounts and pay them immediately.
Diversify Your Credit
Lenders want to see that you can handle different types of debt, so adding a different loan and paying it can have a positive effect on your score.
Hold off on Opening New Credit Cards
Every time you apply for a credit line, such as a loan, mortgage, or new credit card, your potential lender inquires about your credit. This decreases your credit score, so consider not applying for credit if you don’t really need it.
Pay Attention to Your Accounts
Always keep track of your accounts. For this, you can set reminders for when rent, bills, credit card, and loan payments are due every month. A credit book can also help in this task. This small step keeps you at the top of your credit score and determines how much you have left over to budget for other areas.
You should also check your credit scores regularly to track potential errors or fraudulent activity. If you spot something in the credit report, you can dispute it.
Become an Authorized User on Another Account
This is a simple yet effective method to improve your credit score fast. Ask a family member to add you to their credit card account. This way, the payment history of that card is shown on your credit report. However, trust should go both ways. The primary cardholder must trust you, and they should pay credit card bills on time; otherwise, you won’t reap any benefits.
Take Care of Any Collections Debt
If you fail to pay your bills on time, they might be sent to collections. This means the original creditor has written off the debt. In this case, the collection agency will directly contact you, and this can significantly impact your credit score.
Once your debt is in collections, deal with it as soon as possible. Ignorance can get you involved in a lawsuit, and the court may order your wages to be garnished. After you pay your debts, ask the creditor for a goodwill letter, showcasing that the late payments have been removed from your credit report.
How Soon Can You See Improvement
The time it takes to improve credit scores totally depends on the financial situation of the cardholder. At the earliest, you may see your credit score between 30 and 45 days. In other cases, it may take a few months. If you are waiting for negative information to be removed from your credit reports, it may take up to a year or more.
Debt Management Books for Credit
We are sharing a few books on debt management so you can keep your credit reports debt-free.
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The Total Money Makeover by Dave Ramsey
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Your Money or Your Life by Vicki Robin
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How to Be Debt Free by Avery Breyer
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The Meaningful Money Handbook by Pete Matthew
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The Simple Path to Wealth by JL Collins
At the end, we would just say, try to keep your credit scores high if you wish to enjoy a bright financial future. Whether you want to improve your credit score fast or recover from bankruptcy, there is a solution to every problem. We are Eden Press, and we deliver informational books to help people in such matters. Visit our site and find your helpful book today!
