5 Effective Tips To Repair Your Credit Ratings
Unless you are from a wealthy family with a hedge fund in your name, you most likely have to pay close attention to your credit ratings. So, imagine that we are walking with our three-digit credit score written on our foreheads. Would you be out and about with a smile, or would you wear a hat everywhere you go? If you would wear that hat, then your credit rating needs fixing.
According to data on the Equifax website, the average credit score in the US was 698 in 2021. On the other hand, data by Experian shows that the average FICO score for Americans was 714 in 2021. While these numbers show that the average American has good credit scores and might not need that hat while taking a stroll through the neighborhood, it goes without saying that a significant number of Americans might still need our figurative hat.
If you’re one of these Americans and need to have your credit rating/score looking good, then keep reading because we have some helpful tips.
I. Get Lower Interest Rates on Loans
If you consider taking out a mortgage or requesting a short-term personal loan, do you know that lenders have access to or will request your credit report?
Lenders use your three-digit rating to assess if you are creditworthy. Also, your credit score determines the interest rates that you qualify for. The higher your credit rating, the lower interest rates you’re likely to get and vice versa.
II. Get Rid of Credit Errors
Do you know that there could be an error in your credit report? Yes! While the error might not be significant in some cases, it can affect your credit rating considerably. Taking steps to fix your credit rating should assist you in discovering errors in a timely fashion and boost your rating.
III. Less Home Rental Hassle
If you have ever rented a home or apartment, you know that rental homeowners or businesses might want to check your credit score. Why? Sometimes, they use it to determine how much up-front payment they will ask for or how much your security deposit will be.
Practical Tips For Fixing Your Credit Score
1. Know the Full Credit Picture
Logically, you can’t fix something if you don’t know the problem or how bad it is. This is why getting to know your credit score by checking your credit report is an essential tip.
Your credit report has data on how you have utilized your credit for ten years, and this report is then used to calculate your rating. Looking at your report and score will give you a clear idea of your situation and help you know how you can get things moving on an upward trajectory.
2. Pay Your Bills When Due
Some parameters make up your credit rating, and a bill payment record is one of those parameters that make up a significant percentage of your score.
So, when you pay your bills on time, it reflects positively on your rating. If you have difficulties keeping track of your bills and paying them when they’re due, some apps can help you do this.
3. Follow-Up Credit Errors
Again credit errors happen more often than you think, and they could be affecting your credit rating. This is why you should look at your credit report and scrutinize it. If you don’t have experience with this, you can get the assistance of an affordable financial expert.
4. Keep Your Credit Utilization Below 30%
Credit utilization is another parameter that is used when calculating your credit score. Your credit cards most likely have different limits, but because the limit on one of your cards is $3000, you should exercise restraint when it comes to using that card. The idea here is to keep your credit utilization south of 30%.
5. Do Not Close
What do you do with your old credit account/credit cards? Do you close them or leave them open? If your answer is the former, you might want to reconsider your strategy. Keep your old credit accounts open because it helps you give you a long-credit history and boost your score.
While there are other ways to up your credit rating, the above tips are pretty important and could get your rating healthy and keep that “hat” off.
Improving your credit ratings should be one of your major priorities. These tips will help you