how to improve your credit score in easy steps. The following advice will help your improve your overall credit score. Repairing your credit rating may not happen overnight. Before you start, get a score of your current credit rating and see the areas that you need to focus on.
Some items in your score may not actually be your fault, or have found there way onto your score from other people -- or people who used to live at your address.
Your lender will get credit reports and scores from all three major credit reporting agencies: Transunion, Equifax and Experian. They will likely use the middle score to work your loan application. If you have questions, ask your lender to explain which credit scores will be used and how they affect your loan application.
Lenders are scoring you on 5 things:
- Your payment history
- The amount of debt outstanding
- The overall length of your credit history
- The types of credit you are using
- The new credit you are requesting
The top 2 count towards 65% of your credit score so get these right
Go through the following to help get a better credit score
Your payment history
Having a ton of credit cards is not going to help you get credit. Having a couple will because it should show some payment history - which you need.
Always pay your credit card bill on time. Even if you only pay the minimum balance you need to pay them on time. This is a big area. No one want to be paid late and paying on time shows you can manage the finance you have at the moment.
The same goes for common household bills such as utilities, phone bills and even mortgages. To get a good score you must pay these on time and not miss payments entirely.
Amount of debt outstanding
On your credit cards keep the debt to available spend to a minimum. If all your credit cards are maxed out and you have been refused new credit cards (and your credit search will show all these) your overall score will be lowered.
If you have credit cards you don't use that often, don't be tempted to close them as this may work in your favour. It is prudent though to not have too many credit cards. Keep 6 or less.
Overall credit management
Really most of this is all common sense. If you use most forms of credit (credit cards, personal loans, mortgage), pay them off regularly and don't max them out or miss payments, then you're going to be in good stead to have a good credit score.
Repair can take time. If you have months and months where you never miss a payment (even if it's the minimum) and have a low debt to credit available and manage your mortgage, then this is going to help you improve your credit score over time.