How can I improve my credit score? You must have asked yourself this question at some point your life. A credit score is a very crucial element in your financial life. Insurance firms, banks and auto dealers will check your credit score to determine how much they’re willing to lend you plus the interest rate.
In some instances, your current or prospective employer may request to check your credit report before a promotion, raise or hiring.
In short, lending institutions check your credit score to gauge your creditworthiness. Your payment history, length of credit history, total debt, bankruptcy, and how much credit you have are some of the factors used to calculate your credit card score. Here’s a general overview at credit score ranges:
- 300-579 = Very poor (You may need to pay a fee or deposit and your approval is not guaranteed)
- 580-739 = Fair (Subprime borrowers)
- 670-739 = Good (You have a chance to improve your score)
- 740-799 = Very Good (You may receive better than average rates)
- 800-850 = Exceptional (top of the list borrowers)
Why Is Credit Score Important?
The higher your credit score, the higher your chances of getting approved when applying for a loan. If your credit score is low, chances are you’ll be asked for a deposit and slapped with high-interest rates. So the best option is to look for ways to improve your credit score before applying for a loan.
Besides qualifying for a loan, your credit score determines the terms of the loan. If your credit score is good, you may receive the best rates and better terms. You can get that car or house you’ve always wanted and get to save hundreds if not thousands of pounds. So here’s the question in everybody’s mind;
How Can I Improve My Credit Score?
There are a number of simple steps you can incorporate in your routine to improve your credit score;
- Check your credit report and correct possible mistakes.
- Avoid late payments and defaults. Your payment history plays a significant role in your credit scoring. So making payments on time indicates to your lenders you have the ability to take out a loan and pay it back. Make a habit of paying all your bills on time and not just your credit card.
- Get rid of older debts.
- Maintain good credit habits.
- Keep your utilization rate low.
- Clean up your bad credit record. This means paying off overdue bills and monthly payments.
- Avoid applying for new credit cards or large loans. A hard inquiry is required when applying for any loan, and this can lower your credit score.
- Make use of score-boosting programs. These programs are beneficial.
Credit Cards for Building Credit
If you have a bad credit history, you should consider applying for a credit-builder credit card. Even though these cards have low limits and high-interest rates, they can be extremely useful as they allow you to pay your bills on time. And timely payments will boost your credit score and eligibility.
Haley Hayward is an experienced writer at gblogo.com, where she’s credited with more than 200 articles covering everything from entrepreneurial stories to mental health at work.
She also oversees the Comment&Questions, which poses important admission questions to experts in the field, and regularly hosts webinars on various aspects of the business school experience.
Prior to joining gblogo.com, Haley honed her skills as a freelance writer, tackling a wide array of topics from petcare to car maintenance.
Haley holds a Master’s degree in English Literature from the University of Edinburgh, Scotland.