Credit score can be influenced by a number of factors. However, you can have your score lower due to late or missed payments as well as collections and judgments. There are many ways to increase your credit score, and they are easy and free.
When you pay, it is time
Paying on time is one of your most important assets in building credit. FICO reports that approximately 35 percent of credit scores is determined by your payment history. It is essential to pay at most the minimum monthly payment on all your bills.
Payment history
One of the most influential factors in your credit score is your payment history. This account for 35% your total score. Your payment history shows lenders how likely it is that you will make timely payments. It is the most important part your credit report. Therefore, it is essential to pay all bills on time. Even a few late payments won't ruin your credit score so make an effort not to.
Credit utilization ratio
The first thing you should know about credit utilization is how to calculate it. Your credit utilization ratio is the total amount of credit you have used divided by the total amount of available credit. This will give you an idea of your debt management level. The lowest credit utilization is between 30% and 30%.
Diversifying credit
One of the most effective ways to improve credit scores is to diversify your credit. Although it is important that you have a balanced credit portfolio, it is equally important to not use too much of your credit. A healthy credit mix should include both installment loans and revolving accounts.
Fast loans
You can get quick loans to help in emergency situations. It can take a few weeks before you get the money that you need. These loans are less risky than unsecured loans which can take several weeks to be approved. Alternatively, you can borrow money from a friend or family member. Although it may be more expensive than traditional loans this option is much faster. Be aware that you will need a loan agreement. Also, you should have an emergency fund in place so you can quickly borrow the money you need.
Charging off charge-offs or collection accounts
A charge-off can negatively impact your credit score. They stay on credit reports for seven-years. There are steps you can take to improve your credit score and rebuild it. These steps may be slow but can make a big difference to your credit report.