Would you like to learn how to boost your credit score finally? It’s not impossible, but first, you must know what goes into it. Since there are many common reasons for a credit score to drop, we’ll help you identify the typical pitfalls people face.
What Affects Your Credit Score?
Most of the time, when people mention their credit score, it’s within the context of the FICO system. This is the standard that roughly 90% of top lenders use to determine who qualifies for lending. You don’t have to pay to see your credit score because lending institutions pay FICO to tabulate and update this very crucial metric.
FICO breaks creditworthiness into five components, which are weighted differently:
- Payment History – 35%
- How Much You Owe – 30%
- The Length of Your Credit History – 15%
- Your New Credit Lines – 10%
- The Overall Credit Mix – 10%
So, you can tell from the way they proportion it, that payment history and total debt load play a huge role. When we look at that second factor, how much you owe, this plays a big role in determining the suitability of certain options like a personal line of credit. Generally, it helps to possess a debt-to-income ratio of less than 36% to qualify for lucrative loans.
Best Ways to Boost Your Credit Score
If you have a poor credit score (say, less than 600), what are some solutions and good practices to help raise it?
- Pay off outstanding loans or at least catch up on the payments.
- Identify what causes you to miss payments and devise a solution. This could involve reconstructing your personal budget or schedule automatic payments on certain bills.
- Pay off credit cards and never use them again.
- Find ways to qualify for a credit limit increase.
- Identify and confront any potential fraudulent purchases (you didn’t make) that may hinder your credit.
- If you forget to make a payment, try to catch it quickly. You usually won’t suffer a hit to your FICO score if you rectify it within 30 days.
Other Ways to Boost Your Credit Score
Then there are some other things to consider when trying to rejuvenate your credit. If you have credit cards, at least consider lowering your utilization rate. That means that if your credit limit is $2,000 on a credit card, and a good utilization rate is 25%, then do whatever it takes to keep your balance at or below $500.
You can also improve your score by diversifying the credit mix. One way to achieve this is by mixing in an installment loan with your various credit cards. That gives you two advantages: credit diversification and something with a fixed rate.
The highest possible credit score is 800, and, believe it or not, more than one-fifth of consumers attain this. So, never despair or assume that it’s impossible. Instead, stay positive and think of how nice it would be to qualify for easy lending for any amount. That’s entirely possible if you address the various factors outlined in this article.
Cash Links USA Demystifies The Lending Process
If you’re fed up with confusing loan programs, variable rates, and pushy salespeople, then you’ve found the alternative. Fortunately, we have different options for obtaining loans that can assist individuals with various levels of credit. In fact, if done properly, taking out a loan through us could be a way to help boost a marginal credit score above 650 and higher.
Cash Links USA is a proud member of the Online Lenders Alliance, and we’re licensed to provide financial services in five different states: Texas, Missouri, Kansas, Wisconsin, and Tennessee.
We hope this gives you ideas for how to boost your credit score, and that you’ll contact us whenever you need help taking out a personal loan.