Having a bad credit can be a very difficult thing, you may find yourself having a hard time when it comes to getting a loan either a home or vehicle loan.
In this article you are going to find ways that you can used to improve your credit score fast, some of these ways give you result in 14 to 30 days
What is a credit score?
when you go and borrow money they will check your fico score which ranges from 300-629 which is bad, 630-689 which is fair, 690-719 which is good and above 720 which is excellent.
The higher your score the better you are rated as someone who knows how to handle money, in this case the lower interest you are going to pay
If you score is bellow 630 you might be rejected for a loan or might be charged a very high interest rate because statically you have a high chance of making a late payment or even defaulting.
What makes up your credit score?
35% of your credit rating is made up of on time payments : this means you always pay your bills on time without missing a payment or being late
A large percentage of you credit score is rated up by your ability to pay bills on time it will be largely affected if you don’t pay on time.
30% is made up of amounts owed / credit utilization : This is a calculation that takes into account the amount of credit you have at your disposal and how much of it you use.
If you max out your credit cards or use most of the credit that is available to you, it lowers your credit because you are seen as a riskier borrower.
15% is made up of Age of credit : the longer you have had your accounts and they have been in good standing the more comfortable lenders are to borrow you money. Which increases your score.
10% is made up of Types of credit : lenders want you to have experience handling several types of loans just to prove that you are a financially responsible adult, who can handle auto loans, credit cards and mortgage payments,
10%is made up of Hard inquiries : this score is calculated using the number of hard inquiries you have, every time you go and apply for a new loan it is going to show as a hard inquiry on you report and the more hard inquiries you have the lower your score becomes. The reason this happens is more hard inquiries worries lenders, why you are out there looking for more debt.
here are some methods you are going to used to increase your credit:
Step 1. View Your Credit Report
The reason why this is very important to do is once you get your report you will able to know which items need improvement.
It can be one of these issues
1. You do not have enough credit – If you are new to this or haven’t had enough time to open a credit card to make on time payments here is the solution
You can be added as an authorized user to someone else’s credit cards and their credit score can appear on your score
Make sure the person that adds you as an authorized is a responsible person who has no late payments or other things that may affect your credit.
2. You have late payments :Late payments are going to stay in your report for 7 years
3. Collections : This is when you are late for a bill payment for more than 180 days and a lender is forced to right it off as a loss and then they sell that debt to a third party debt collection agency which in turn will call you none stop just to pay it off.
4. High Balances
This is when you borrow the maximum you are allowed to borrow when you do this lenders see you as a big risk, which causes your score to be lowered , pay up your balances so that your credit utilization is below `10%, for most people this will be very effective and increase your score in the shortest period of time.
The other way is to increase your credit limits or get more credit cards to decrease your high utilization on one card. If you have a spending problem do not do this.
Step 2 Use Experian Boost
It adds phone/ utilities to credit history
Step 3 Removes Late Fees And Deliquesces
when you miss a bill payment or you are sent to collection this will affect your credit but it does not mean all hope is lost
you have to know that the longer you wait with a late payment the more it affects your score
Make sure you pay late bills as soon as possible
Always negotiate the terms of your debt, when you are having difficulty paying the lender always reach out to try to strike a deal with them so that you are able to pay
If you have paid up the debt ask the lender to remove it just as a curtesy
you may find these in the amounts you owe or due dates, you can dispute the late fees as inaccurate and if they can not prove that everything is correct they can remove them.
Don’t Close Old Accounts
Your credit score is calculated by the average age of your credit history which means it starts with the age of your oldest account. When you close your oldest account you have wiped some credit history