Increase Your Credit Score
There are many reasons that warrant for a higher credit score; obtaining a mortgage, refinancing a home loan, and applying for a credit card are all instances in which it pays to have a higher credit score. A higher credit score means lower interest rates and flexible repayment terms.
If you are trying to rebuild your credit score after a bout of missed and defaulted payments, or find your score dropping – these methods could take your credit score on an upturn, increasing rather than decreasing your FICO score.
Use secured credit. If you are unable to obtain unsecured credit, consider using secured credit to establish a score. Secured credit requires a vehicle, home equity or cash deposit as collateral. This collateral is often held until the account has been established positively, or until the account has been closed. In the case of a cash deposit, it benefits the consumer by accruing interest throughout the term of the credit card. Secured credit agencies report to the three main credit bureaus on a monthly basis, and could mean that you can increase your score in as little as six months. At the end of the term when the credit has been secured, the deposit is often returned to the consumer via check or is credited against the account.
Repay debts. If you have outstanding debts that have become defaulted, making an effort to repay these debts could result in a higher credit score. The debt to credit ratio determines a significant portion of the credit score, therefore the repayment of debt is essential to increasing your credit score.
Establish a monthly payment schedule for all existing bills and obligations and stick to it. Missed payments mean higher rates on credit scores, and negative implications to the credit score with other accounts. Making on-time, monthly payments could mean the difference of an approval for your next loan.
Avoid opening up multiple new accounts. Up to ten percent of the credit score is calculated using the history that has been established through the open accounts. Using this history, lenders determine the credit worthiness, as well as contributing to the credit score. Opening up multiple accounts depletes this history, as an average is taken of the history.
Maintaining a variety of credit sources, such as; credit cards, loans and revolving lines of credit ensure that the credit history will be positive and include a variety of credit applications. This demonstrates versatility to a lender decreases the risk and increases the credit score.