How to Increase Your Credit Score: Check your Credit Score Regularly

November 21, 2022

Here we will be discussing the various ways how to increase your credit score. Having a good credit score gives you an advantage in so many ways. For instance, entitlement to loans among others.

Furthermore, your credit score tells lenders how well you use credit. New loans can be granted, and it also gives the borrower entitlement to lower interest rates.

How to Increase Your Credit Score

However, before we tell you about the various ways you can boost your credit score overnight, We must first look at what a credit score is.

Credit score can simply be defined as a range of numbers that determines the eligibility of individuals for various loan platforms and mortgages. This is judged solely by the credit history of the individual, including opened accounts, levels of debt, and levels of paid debt.

Credit History Review

To boost your credit, checking your credit history helps you know what works for you and what doesn’t. There are three major national credit bureaus:

Equifax
Experian and
TransUnion

They can help you review your credit report and also give you feedback on what is beneficial to raising your credit score and what is not.

Here are listed the elements that can help you increase your credit score:

historical records that contain all your on-time payments
Lower the balance on your credit cards.
merging of too many credit card and loan accounts
Old credit accounts
Late or missed payments

Check your Credit Score Regularly

Checking your credit score regularly gives you an awareness of mistakes made. But always remember to trade with caution while doing this so that scores are not altered. There is the option of free credit monitoring being offered to customers by the banking organization.

Find out if your bank offers this service. Get yourself enrolled on this platform, and you will be frequently contacted when the number of your scores changes.

Bills Payment

A majority, if not all, of lenders, make use of FICO scores. which is solely determined by five different factors:

Payment history (35%
Credit usage (30%)
age of credit accounts (15%)
Credit mix (10%)
New credit inquiries (10%)

From the statistics above, you can see the rate at which payment history influences the overall outcome of your credit score.

This can be to your advantage and also be to your disadvantage. By that, we mean that if you have a history of regularly paid-off debts or bills, it is very vital to the increment of your score. However, if your history is one of many old unpaid bills, it reduces your credit scores.

Lesser Credit Utilization

Credit utilization (CU) is the proportion of credit that is used by you at any given time. The easiest way to ensure that your credit utilization is as low as possible is to make full payment of your credit card balance.

This can sometimes be hard to achieve, but you can also try to keep your total outstanding balance in a very low range by taking it down to about 10% or 30% lesser. By so doing, you can also increase your credit score.

Increase Your Thin Credit File

About 62 million Americans have this issue. A thin credit file shows that you do not have a good credit history to provide a credit score. Luckily, there are different ways that you can make use of to increase a thin credit file. Let’s take a look at two kinds of credit boosters:

Experian Boost: This is a new program that makes use of financial data that is not present in your credit report, like your banking history and utility bills paid. It calculates this alongside calculating your Experian FICO Score. The great thing about Experian Boost is that it is free and that it is created for individuals with low or no credit but who have a positive history.
Ultra FICO: This is another program designed to use banking history to build a reasonable FICO score. It can help create a positive FICO score by making savings, using one bank account for a long time, settling bills through that same account over time, and staying away from overdrafts.

Retain Old Accounts

How long you have had a credit account and the sustainability of a particular credit score on your account put you in a positive light toward lenders. If you have in your possession an old credit account that is not being put to use presently by you, don’t close it.

However, your credit report will still contain the history of credits made by those accounts, and the closing of credit cards despite having a balance on them will lower the credits made and increase your credit utilization ratio. That alone would take a few points from your score.

Debt Consolidation

Outstanding debts are a major setback for you in getting fresh loans from lenders. But this can be overcome by debt consolidation loans from banks or credit unions, and you can then offset every single debt.

Organizations like banks and credit card companies usually offer low-interest rates and therefore give you the chance of dealing with just one debt rather than having many debts linked to your account. This increases your credit utilization ratio and your credit score.

Credit Monitoring Service (CMS)

This is the most reliable method of keeping a close watch on the constant changes that happen to your credit score. This service is sometimes offered for free, and it helps keep track of changes that happen on your credit report, for example, newly opened accounts among others.

In addition, CMS also provides help to prevent theft and fraudulent acts. For instance, you are notified of the opening of a credit card account, which is reported in association with your credit file. You can report the transaction to the credit card company as potentially fraudulent activity.

Frequently Asked Questions

Does paying off Collections boost credit scores?

Unfortunately, no, it doesn’t in any way. With the innovation of new methods of calculating credit scores, you will observe that they do not count collections paid by you in the past when they have a balance of zero.

Does paying off loans affect credit scores?

Surprisingly, it does, but negatively. By negatively, we mean that it knocks your credit history. When you pay off loans from old credit, it is recorded as a newly paid-off loan and therefore drops the overall outcome of your score.

In addition, if the loan paid is your only debt, it also affects your credit mix negatively.

What are the factors that influence your credit report Positively?

Concurrent EMI payments

Management of Financial Assets
Credit card usage
Orderliness of credit report

Can all individuals have access to credit reports?

It depends; not many people have access to a credit report. But a few people and organizations that honestly need it may be given access to it. Here are listed some organizations and institutions that are accessible to your credit report:

Banks
Insurance Companies
Employers
Government Agencies

How long does improving your credit score take?

There is no precise point you could get by any action taken by you; that is to say, there is no fixed number of credit scores gained by an action taken by you weekly or even monthly. The time range it takes for your credit score to increase is entirely based on what got it low in the first place.

By that, we mean if what caused your credit score to get reduced resulted from credit utility, then you should consider paying off your balance. Doing this can skyrocket your credit score in just a month.

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