Archive for August 2014

Simple Tips to Improve Your Credit Score

You are not happy with your credit score. You want it to be higher so that you can get better deals on all credit products including a mortgage. How do you achieve this without much effort and great strain on your budget? Use the three super effective methods described here.

Pay all bills when they are due.

Since 35% of your credit score is determined by payment history, it is absolutely mandatory that you pay all bills which you have on time. These include not only utility and cell phone bills, but also insurance premiums and personal loan installments. You must not be late with rent or mortgage payments.

In order to ensure that you are never late with bill payment, you must have a well prepared budget every month and adhere to it strictly. Try to plan all of your expenditure and to leave some spare cash for emergencies, if possible. Use all methods for saving from coupons to discount deals. Use a bill payment app or a similar tool to plan and schedule the payments to ensure that you will never be late just because you have forgotten when the due date is.

Achieve low revolving credit utilization.

This may sound complex, but it is actually simpler than you think. In order to calculate your revolving credit utilization ratio, you need to divide your total outstanding credit card balance by the sum of the limits on all cards which you have. Then you need to multiply the number by 100 to get a percentage. Basically, this ratio shows what portion of the available credit you use. Ideally, it would be between 20% and 30%.

It is important to achieve this goal since utilization accounts for 30% of your credit score. There are two ways to do it. The first one is to reduce your credit card spending. The second one is to have the balances on your cards increased. You have high chances of getting your request approved if you have good and sufficiently long credit history with the respective lender.

Keep old credit cards and avoid new loans.

This is a really simple and straightforward method that anyone can use to get good results. This is because the credit history makes 15% of a person’s credit score. The longer you have kept a card for, the better your credit history will be. You can readily use an old card for paying a few bills or making one or two small purchases. As you keep repaying the debt promptly, you will see a boost in your score.

At the same time, with new loans, you will get a lower debt-to-income ratio and this will have an adverse impact on your credit score. That is why you should stay away from borrowing fairly big sums until your score is improved. If you absolutely need to get cash, however, you should not hesitate to shop around. This is because all of the inquiries which you make count as one for scoring.

Use all of these methods for improving your credit score and the strategy will pay off sooner than you think.