Blog Highlights:
What is a Credit Score and Why Does It Matter? Learn how your credit score impacts loans, interest rates, your daily life, and understand its categories.
Proven Steps to Raise Your Credit Score Fast: Explore actionable tips like disputing errors, paying off debt, and negotiating with creditors to improve your score.
Build a Strong Credit Foundation: Discover how to maintain a high credit score with strategies like timely payments, limiting inquiries, and smart credit usage.
The three-digit number known as a credit score greatly influences our financial lives. It ranks among the determining factors of whether people gain approval for auto loans, mortgages, credit cards, and other borrowing opportunities. Your credit score also impacts the interest rate you’ll receive as well as your monthly payment amount. That's why it's crucial to ensure your credit score is as high as possible. If your credit score is in need of a boost, no worries. While it may seem impossible, your credit score can be increased in 30 days or less.
In the simplest of terms, a credit score involves a number between 300–850 lenders used to evaluate your creditworthiness. This number is calculated using objective and balanced metrics based on the Fair Isaac Corporation model. Commonly referred to as "FICO" or "FICO score," credit reporting bureaus arrive at a number based on repayment history, debt-to-credit thresholds, age of accounts, credit inquiries, and borrowing diversity. Lenders typically consider the credit score from one or all of the three major reporting bureaus — Equifax, Experian, and TransUnion — and put them in categories similar to the following.
Depending on which range your credit score falls into, job opportunities, apartment rental applications, cellphone contracts, and other aspects of your life could be negatively impacted.
To say we live at a time when our creditworthiness and quality of life are bound together would be something of an understatement. A low credit score might hinder you from obtaining a personal loan for medical expenses, getting a mortgage for a home purchase, or financing essential dental care for your children. It's in the best interest of you and your loved ones to address and correct anything that reduces your credit score. These are tried-and-true methods to raise your credit score and in turn maximize your borrowing potential.
Equifax, Experian, and TransUnion are required to provide you with a free copy of your credit report every 12 months. There are three established methods to secure a free copy. These include the following.
Visit www.annualcreditreport.com and fill out the online forms.
Call (877) 322-8228 and request the copies.
Mail a request to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Once you receive copies of your credit report, review the information for errors. It's not uncommon for name misspellings, outdated information, or incorrect personal identity information to appear. If you find mistakes, write an explanation, provide documentation to support a correction, and send it to the credit bureau.
Credit inquiries stay on your credit report for two years and can negatively affect your credit score. Disputing these inquiries may lead to removal. Simply use the credit bureaus’ dispute system which requires the creditor to verify that you gave them permission to view your credit file. It’s likely they can’t. Your credit scores could improve quickly if removed.
Debt-to-credit availability remains a standard FICO metric. When you pay off a loan or credit card balance, the ratio improves. Paying down debt ranks among the easiest ways to increase a credit score in 30 days or less.
Creditors are usually willing to renegotiate repayment terms when people fall behind. The concern that someone will stop payments altogether gives debtors enough leverage to open talks. Explain the reasons why you're financially struggling and establish new terms. Part of this process may involve the creditor removing an overdue or delinquent designation from the credit bureaus. That deletion generally has a positive effect on your credit score.
Limiting credit pulls helps consumers avoid unnecessary hits on their credit scores. Another strategy involves what lenders sometimes call "soft inquiries" that have less impact. Soft inquiries are used for pre-approvals, and the process won’t affect your credit score until you are certain about closing or finalizing the loan.
If you are considering applying for a mortgage, car loan, or other major borrowing option, avoid additional purchases. Increasing debt generally causes a credit score to dip.
On-time payments are a key to credit score success. Repayment history comprises 35 percent of your FICO score evaluation. Late payments have a debilitating effect on your credit score.
As you can see, raising your credit score is possible! If you are looking to increase your credit score, be sure to stay connected to our blog or contact us today for more information.
