Credit scores are a matter of concern for most Americans and a majority of us try hard to improve our credit scores. How can you improve these?
Build a strong credit age, a short credit history, by default, doesn’t give you a good credit score. There isn’t enough data to calculate an accurate score. You could use a friend’s or a family member’s credit card which has a good credit history and ask them to add you as an authorized user. However, this is slightly difficult as they would not want to be responsible for any charges you make. It is advisable to wait and let your score grow gradually over the years.
The average period to growing a good credit score is 5 years and more. Even if you’ve made all your payments on time in the first year, your credit score will still be lesser than that of an individual who has made all payments on time for over 5 years.
If you’re starting out on a new credit card, make small purchases and pay them off monthly to show that you can manage your expenses. Agencies like DrCredit can help you evaluate your best options for growing your credit score.
Pay all your debts instead of transferring them to other accounts. If you see any debts that you don’t recognize, dispute it with all the three major credit bureaus. When they get removed, you’ll find that your credit score improves quickly. If you have any loans then pay them off periodically and well within time. Getting quick unsecured personal loans sounds like the best option when you’re in a tight spot but it’s not the best for your credit score.
Build new scores:
If you’ve had a history of bankruptcy or suffered earlier, you may be disheartened. Even when you’re at an all-time low, you can still grow your credit score. Start from scratch. You can grow your scores again in no time. Due to federal laws, there’s a limit to how long bad transactions can affect you.
Secured credit card:
Apply for a secured credit card. When you deposit some money into a checking account the lender will extend credit of the same amount to you. You may even get more credit in some cases. Getting a secured card assures lenders that you have the capacity to pay off your debt. In case you make a default on any payment the amount you deposited initially will be used to pay off the debt.
If you want a good credit score, don’t apply for too much credit if you have payments due to other cards. The 10% discount on stores on new cards is very attractive initially but eventually, you are growing more debt. Applying for credit also affects your lenders who get concerned about your debt-clearing capacity.
Improving a credit score takes time but it is worth it in the long run. You can save money and maintain a good credit score if you plan your expenses well.