One of the most essential indicators of your financial well-being is your credit score. The higher the score, the easier your life is. Because of certain situations, our credit might get lower during our lives. On the other hand, there are various ways through which you would be eligible to fix it.
This article will provide you with the easiest steps to help you improve your credit score in a short period. So, if you are interested, keep reading. Here on Philadelphia Weekly, you can find the 7 best repair companies in Pennsylvania.
Before jumping into the main topics, let’s first understand why you need to keep it high and what can lead to bad credit.
Rejections for Loans
One of the worst consequences of bad credit is that it limits your ability to get different types of loans, including car, personal, student, etc.
Rejection of Rental Application
Usually, the property owners conduct a background check on your credit history. If they find out about your bad credit history, getting a rent would be less likely, as they might no longer trust you.
Rejection of a Job
As we know, many companies tend to do background checks before hiring a person. Background checking will involve looking at the person’s credit history, criminal history, etc. In some cases, especially if the job is finance-related, you might get rejected for having a bad credit history. Although these people might not be able to see the exact number of their credit scores, the history would be visible to them.
In case you have a lower credit score, many states would charge higher insurance rates. Car insurance companies, for example, frequently utilize information from your credit report and your driving history to determine your prospective risk of filing a claim. So, be attentive.
Now Let’s Understand How You Can Fix Them
Pay on Time
One of the basic ways to fix your credit is to pay the bills or loans on time; otherwise, it will be incredibly difficult to improve your score even if you follow all of the other suggestions. Depending on your contract, the frequency of your payments might vary. One effective way would be to pay per month. This way, you will not feel as much burden as when paying the whole bill 2-3 times.
If you find it difficult to keep track of your time and follow the deadlines, you can download various reminder applications on your phone or circle the days of your payment on your calendar. You may be so overwhelmed with your business or personal life that you miss the payment date, which, as previously stated, is not advantageous. To avoid a situation like this, you can also, for example, request that the bank send you a phone message as a reminder.
Don’t Close the Old Accounts.
You may even be tempted to close your old credit cards when you’ve paid them off your old credit cards. But don’t be too fast to do so. You may develop a more extended credit history by keeping them open, which accounts for 15% of your credit score.
Correct the Errors
It is not an exception that there might be some misunderstanding between you and the credit bureau, and an error might have happened, such as a wrong identification number, home address, etc. While understanding your credit report and credit score is a fantastic starting point, it’s also critical to search for inaccuracies. If you find any, disputing them and removing them is a reasonably straightforward procedure.
Here are the most important contributors to a higher credit score
Payment History – getting done with the payments on time leads to a high credit score of 30-35%.
Length of Credit History– for how many years you have kept your account open is almost 15-20%.
Credit Mix– the diversity of your credit can also be a reason for a higher score of 10-15%
To conclude, this article summed up some of the critical information you need to know on how one can raise their credit score. We also provided insights into the negative effects of a bad score on your life and stated three main contributors to a higher score.