Credit scores are vital in determining your financial capability. Credit scores range from between 300 to 850 and it allows lenders to determine their risk when they let you borrow. With a high credit score, your chances of being approved are high and you will be able to get lower interest rates.
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Improve Credit Score to Get Benefits and Better Interest Rates
1. Improve Credit Score to Get Benefits and Better Interest Rates
Credit scores are vital in determining your financial capability. Credit scores range from between 300 to
850 and it allows lenders to determine their risk when they let you borrow. With a high credit score, your
chances of being approved are high and you will be able to get lower interest rates. On the contrary, low
credit scores your chances of being disapproved are high and you will get extremely high interest rates.
Here are a few steps you can follow that can help improve your credit score:
Paying Off Debt Should be Taken Seriously
If you are a credit card holder, you should focus on your debt repayments. It is vital to pay your credit card
bills on time and also pay attention towards your accounts’ balances and pay them on time. These will
definitely boost your score.
Make your debt as low as possible
Make sure that your debt is below 30% of the available credit limit of each of your credit cards. This
boosts the amount of available credit and will also affect your credit score positively, enhancing your
credibility. Verify your credit card balances and send higher payments to the cards with balances near the
credit limit. Your aim should be bringing down your overall debt to less than 30% of available credit limits.
Accurate use of credit
One should not use credit cards even if you are paying your bills in full every month. The balance of your
last statement is reported to the credit bureaus. Making use of a credit card that already has a balance
will not enhance your credit score. Avoid paying extra because of the interests.
Checking Credit Limits
Always check your credit limits and make sure that they correspond to the information written on your
credit statement. If the report states a lower credit limit than what you actually have, it can definitely bring
down your credit score. This is because it will appear that you are utilizing more of your available credit. If
there are any errors and inaccuracies such as these, immediately contact the credit card-issuer to correct
the error.
Thoroughly verify your credit report to ensure accuracy
You should have the credit file corrected if there are errors, as errors can lower your score. Below are
some of the reasons why credit scores decrease:
1. Late payments, accounts in collection, unknown charge-offs.
2. Reporting of unreal credit limits.
3. Accounts which are not reported as “paid as agreed’ or “current”, including “settled”, “paid
charge-off”, “paid derogatory”.
4. Accounts exhibited as unpaid and included in a previous bankruptcy.
5. Any negative item, which is more than 7 years and still present on your report.