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5 Proven Steps to Improve Your Chances of Getting Credit

In these uncertain times, it’s more important than ever to build and maintain a good credit score, and there are simple and tried-and-true approaches for doing so.

Credit scores are essential for acquiring mortgages or loans, but they may also significantly impact every financial aspect—from mobile phone contract prices, motor insurance to general employability.

How To Raise Your Credit Score

Your credit score is supposed to indicate whether you’re a high-risk or low-risk applicant. 

FICO and VantageScores (created by the three leading credit bureaus, Experian, TransUnion, and Equifax) range from 300 to 850 points

A 700-point score is deemed “excellent,” and Lenders will provide you with better lending terms and fees if your credit index is greater.

Below are ways you can increase your credit score: 

1. Pay Your Bills On Time

Experian reveals that the loan repayment history is the most crucial factor in VantageScore and FICO scores. From the lender’s viewpoint, a track record of on-time payments is a solid signal that a borrower will handle future obligations properly. 

According to John Ulzheimer (credit expert), you need to avoid mistakes like foreclosure, third-party collection, late payment, and defaults if you want to improve your credit score. He also says that declaring bankruptcy is a wrong decision, as it may indicate non-performance of a responsibility.

2. Ensure Your Credit Utilization Rate is Low

Check your balances against the credit limit to ensure you’re not overusing your credit card, which might put you at risk.

Ulzheimer suggested aiming for a 10% usage rate and explained that the higher that ratio, the fewer points you’ll get in that category. He further observed that the highest average FICO ratings had a 7%t usage rate.

In addition, your utilization rate may be affected by the date your credit card company reports to the credit agencies.

Your score is based on your utilization rate when your lender reports. FICO’s rating methods, according to Ulzheimer, make no distinction between individuals who pay their credit card amount in full each month and individuals who carry a balance. On the other hand, VantageScore considers whether you pay fully or carry a balance from month to month.

3. Keep Old Accounts Open

Most people are tempted to wipe off loan records after clearing them, especially the student loan. But if you made the repayments on time, these records can significantly boost your credit score. 

According to Bistritz-Balkan, vice president of communication at Equifax, borrowers should not close the account in hopes that it’ll improve their credit score, while paying off their debts in full and on time is a good thing. She added that having an account with a good payment history can encourage lenders to give you loans with better terms. 

Closing a credit card account will damage your credit score since your maximum credit limit will be reduced. It’s best to maintain the card with a zero balance. If you still have balances on other cards or loans, your utilization ratio will increase.

4. Take Advantage Of Score-Boosting Programs

The number of accounts and their average age play a significant role in your credit rating, leaving those with limited credit backgrounds disadvantaged. 

ultraFICO and Experian programs allow borrowers to improve their credit profile by advising them on their financial issues. 

You may link your banking data to these programs, allowing the credit bureau to include your online and bill payment records in your credit report. When UltraFICO calculates your rating, you can provide permission for your financial data, such as checking and savings accounts, to be examined alongside your credit report.

5. Only Apply For Credit You Need

It is not a good idea to apply for more than what you need, whether you are approved or you have gotten a pre-qualified offer of credit. 

Loan matching services, such as Viva Payday Loans, will connect you to reputable lenders online, thus avoiding lenders that will only subject you to hidden fees and ensuring you repay your loans in time. 

You may find it hard to repay the amount on time. A series of hard inquiries, on the other hand, may indicate to lenders that you are taking on too much debt. According to a TransUnion spokesperson, the consequences of a hard credit draw on your score might linger up to 12 months. 

Bottom Line 

Don’t panic if your bad credit score is holding you back. You can start improving your credit score and getting on the road to a brighter financial future right now.

A strong credit score has a significant influence. You’ll be able to get cheaper interest rates on anything from student loans and personal loans to mortgages and credit cards if you have a higher credit score.

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