Simple and Effective Ways To Improve Your Credit Score

One of the many important things to consider when investing in real estate is staying on top of your credit score, as this can impact your ability to borrow money and rent, lease or buy properties. Having a higher credit score tends to be better and proves that you are more reliable with your finances. A low credit score can indicate a history of defaulting on payments or having trouble paying off loans or debts. As such, the higher your credit score the better. Not sure how to improve your credit score? Don’t worry, we’ve got you covered. Read on below to learn more about your credit score, how it affects you and ways you can improve it. 

What is a Credit Score?

Before we get into some ways to improve your credit score, let's go over what a credit score is first. A credit score is a triple-digit numerical value that is intended to represent your reliability when it comes to paying bills and managing finances on time. There is a range of different credit scores and scoring models that can be used but generally, credit scores are determined using information from credit reports including levels of debt, history of payments and how long your credit history dates back which is sourced from places like credit bureaus.. The point of a credit score overall is to prove that you are reliable and trustworthy with your finances and bill payments. Higher credit scores tend to result in better terms of credit, with the highest credit score being about 850.

Credit scores typically range between 300 to 850 and higher scores indicate that the person has demonstrated preferable credit behaviour consistently in the past. This makes potential creditors or loan officers more inclined to accept requests for credit, such as when buying a house. The ranges of a credit score can vary based on the model being used but for the most part, they follow the same pattern.

• Credit scores between 300-579 are considered poor

• Credit scores between 580-669 are considered to be fair

• A credit score between 670-739 is considered to be good

• Credit scores between 739-799 are very good

• A credit score between 800-850 is excellent

There are many different credit scoring models, and some of them use other data, like income level, when calculating credit scores. Credit scores are often used by potential lenders or creditors, including the bank, credit card companies or automobile dealerships, as a factor in deciding whether to provide you with credit, such as a loan or a credit card.

Improving Your Credit Score 

Now that you know more about what a credit score actually is, how it is determined and why it is important, we can delve into some easy ways that you can increase your score. 

Here are some simple things you can do to improve your score!

There are a number of useful hacks, including using your credit card, to boost your credit score

Rebalance Credit Utilization

One of the best and easiest methods for you to rebalance your credit utilization is by keeping the balances you carry on your credit accounts to a minimum. This would ideally look like paying off all credit card balances in their full amount every month, as opposed to working in installments or minimum payments so that debt builds up over time and makes you a higher risk for a creditor to take on. 

Stay On Top Of Bill Payments 

One of the simplest and easiest ways to improve your credit score is to stay on top of your bills and ensure that they are paid on time and in the expected amount. Missing bill payments, or not setting up payment plans to pay in installments if you cannot pay the full amount are deceptively simple ways to accidentally plummet your credit score. So establishing payment plans, like installments, and setting reminders or automatic payments for your bills so you never miss them can help you to build up your credit score. 

Keep Old Credit Open 

When lines of credit are no longer used, you might be tempted to close them, however, keeping old lines of credit open can actually help to improve your credit score. As you will have no bills or payments to make with this old credit open you can stand to benefit from longer average credit history and a larger amount of available credit to you. Credit scoring models will reward you for having long-standing credit accounts, and for using only a small portion of your credit limit thus overall improving your final score.

Dispute Inaccuracies on Credit Reports 

As credit scores are often calculated using information collected from many different places over periods of time, sometimes there might be mistakes, errors or inaccuracies on your credit reports. Always make sure to check your credit report and dispute any discrepancies you notice, as even small things can make a big impact on your credit score in the end. 

Buy With Credit and Pay Off With Debit

Making your regular purchases such as clothing, and groceries, with your credit card and then using your debit to pay off your credit card is a great way to improve your credit score whilst earning cashback. 

For more fast and easy tips to help you manage and build your finances check out CADMEN properties.