A good credit score gives you more loan options, lower interest rates, and even rewards and special offers. Eventually, it can even help you save thousands of dollars and get peace of mind from knowing you can take out a loan any time you need financing.
However, many Americans don’t have good credit. Surveys show that 30% fell into debt because of the double whammy of income loss during the pandemic and inflation. If you’re one of them, here’s some good news: you can rebuild your credit score. You don’t need a higher income—just careful, consistent financial decisions.
Just like a doctor needs a physical exam or lab test to diagnose a disease accurately, you need to get your credit report to find out what’s pulling down your score.
Now that you’ve diagnosed the problem, you can make a plan. But first, follow the next steps to increase your score for each factor.
Payment history makes up 35% of your credit score, so you must prioritize paying bills on time to improve your rating.
What if money’s tight this month, and you need a couple of days to raise the cash? You have up to 30 days after the due date to settle the bill before it’s reported to the credit bureaus.
If you foresee needing more than a month, call the creditor to ask if you can adjust the due date—if you pay bills regularly and are a long-time customer, they may agree.
Your credit score may have been pulled down because a creditor did not report a payment, incorrect accounts because of someone with a similar name or identity theft, duplicate accounts, outdated credit limit information, or closed accounts that remain open in the report.
Report errors to the credit bureau to improve your credit score.
Credit utilization is how much of your credit limit you are using. There are two possible ways to fix this:
Another common problem is when you don’t have any credit history because you’ve never taken out a loan or gotten a credit card. So, lenders don’t have any basis for your score. As a result, you may be approved for smaller personal loans but not for a car loan or a mortgage.
That’s why you need to establish your creditworthiness by taking out personal loans and then paying them off on time for your overall financial health. You can also sign up for programs like UltraFICO and RentTrack or apps like Altro that will report other financial factors—like banking history or rental payments—to bureaus.
Á lot of financial advisers will tell you to cancel credit cards you don’t use. While that is true, since you save on fees and prevent overcharging, don’t cancel your oldest cards. The length or age of credit affects your score. If you don’t want to use it, just cut up the card but keep the account open.
Plus, canceling a card that you’ve already paid off while keeping cards where you have a balance will affect your credit utilization ratio.
A credit mix is how many different credit or loan accounts you have. The types of credit are:
Credit mix accounts for 10% of your credit score. A good credit mix shows that you can handle different loan responsibilities. For example, revolving credit shows that you always pay on time, while installment credit shows that you can pay off bigger amounts.
While taking out a credit card or loan can improve your credit score, you mustn’t apply for several simultaneously. Credit bureaus may think that a lot of borrowing is a sign that you need money quickly.
Debt consolidation can help lower your credit utilization and allow you to pay off one lender. Just check to see if there are any fees for transferring the loan or if the lender has any penalties for ending a loan early.
If you know a friend or family member with a high credit score, ask if they can add you as an authorized user of a credit card they’ve used for a long time.
They don’t even have to give you the card (and you definitely shouldn’t take advantage of them). It helps pull up your score by improving your credit utilization ratio, payment history, etc.
A loan can help you start a credit history, improve your mix of credit, or raise the percentage of your credit that you are using.
But loan applications can be tedious and time-consuming. Simple Fast Loans can make it easier for you. Instead of lining up at different banks or calling to find out their requirements, you must fill out one online application.
Simple Fast Loans will then look for a lender in your state and facilitate the process.
Just fill up the inquiry form and submit a few documents online. The process takes just a few minutes!
Don’t worry: the form is concise, the site is secure, and all information will be kept confidential and only used to help you find a loan. And if you have any questions, a loan representative will always help you through the process.
Simple Fast Loans offers personal loans and installment loans.
You can borrow from $200 to $3,000 depending on the loan you are applying for, your income, credit history, and the regulations in your state.
While some loans require a credit check, you do not need a perfect score. Instead, send an inquiry to a representative to discuss your loan options.
Don’t be discouraged by a bad credit score or lack of credit history. You can rebuild your credit and find a lender to help with emergency expenses. You can take that first step towards taking charge of your finances through Simple Fast Loans.
Browse through the Blog to read articles and tips on managing debt, improving your credit and saving more money!