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, you can have your score lower due to late or missed payments as well as collections and judgments. There are many ways to increase your credit score, and they are easy and free.
When you pay, it is time
On-time payments are one of the most important aspects in building credit. FICO estimates that about 35% of credit scores are based on payment history. It is critical to make at least the minimum amount due on all of your bills, and if possible, make more than that every month.
History of payments
Your payment history plays a major role in your credit score. This account for 35% your total score. Lenders will know how likely you are that you will pay your bills on time by looking at your payment history. It is the most important part your credit report. Therefore, it is essential to pay all bills on time. Even a few late payments won't ruin your credit score so make an effort not to.
Credit utilization ratio
It is important to understand how credit utilization works. Your credit utilization rate is the ratio of total credit used to total credit available. This ratio will determine how debt-management is done. The lowest credit utilization is between 30% and 30%.
Diversifying Credit Mix
Diversifying your credit mix is one of the easiest ways to boost your credit score. While it is important for you to have a mix of credit types, it is equally important not to over-use your credit. A healthy credit mix should include both installment loans as well as revolving accounts.
Apply for quick loans
The quick loan is designed to be available in emergencies. It may take several days for you to receive the money you need. They are not as risky as unsecured loans, which can take weeks to get approved. A friend or family member can lend you money. While this method is less expensive than traditional loans, it is faster. You will be required to sign a loan contract. It is a good idea to have an emergency fund, so you can quickly borrow money when you need it.
Charge-offs and collection accounts
Charge-offs can have a detrimental effect on your credit score. They can stay on your credit file for up to seven years. You can rebuild your credit and get back a good credit score. These steps may be slow but can make a big difference to your credit report.