Your credit score is one of the essential measures of financial freedom. It lets lenders know how responsible you are when using credit. The higher your credit score, the easier it will be for you to get approved for new lines of credit and loans.
With a good credit score, you’ll be able to get the lowest possible interest rates when you need a loan. However, improving your credit doesn’t happen overnight. It requires strategy, time, and much patience.
You can follow many simple strategies to boost your credit score. While these strategies might take a while, starting on time is better. This article will explain what credit score means and explore how you can improve your credit score. We will also discuss how to get a 720 credit score in 6 months, plus the importance of having good credit.
What Does Credit Score Mean?
Your credit score is a digit that rates your creditworthiness. It usually ranges from 300 points to 850 points. The more elevated your credit score, the better you look to potential lenders. Your credit score includes your credit history and your repayment history and amount of debt.
Credit scores affect your financial life since most lenders use your credit scores to predict whether you’ll be able to pay back a loan fast or not. They also determine your interest rates on credit limits, cards, and loans.
Lenders consider Individuals with a 552 credit score high credit risks, and even a 621 credit score is not considered good enough by most lenders. As a result, most people with such low credit scores get charged high-interest rates by lenders. Conversely, a credit score of 715 or higher is fair and acceptable to lenders. It also attracts a lower interest rate.
Your credit score also determines how much initial deposit you need when buying a house or a cable service. Also, loan companies frequently review borrowers’ credit scores to know whether to change the interest rate or credit limit on a credit card.
How To Improve Your Credit
The strategies you need to improve your credit score depend heavily on your circumstances. They are also common for anyone who wants to improve their credit. Below are some steps you can take to improve your credit.
Get a Secured Credit Card
A secured credit card is one way to rebuild or boost your credit. You might wonder, “by how much will a secured credit card raise my score”? Depending on how well you manage your secured credit card, you can see a 200-point increase in your credit score within a year. The secured credit card requires a cash deposit to work. You can decide to make an upfront deposit which will become your credit limit. For example, putting a $500 deposit down will give you a $500 credit limit.
You can use the card as you would other credit cards. However, in this case, your deposits will protect your credit card issuer from the possibility that you won’t pay your balance. By making on-time payments, a secured credit card will forward your account history to the credit bureaus to be added to your credit report. Accumulation of good payment history will gradually help you build and boost your credit.
The impact a secured credit card has on your credit score varies. It works well only if you use your secured credit card responsibly over an extended period of time. This card will likely help individuals with a dented credit history looking for a way to dilute past mistakes and add a more positive credit history.
Make Your Bill Payments On Time
Your payment history is a record of the payments on your credit accounts and other debts, which constitutes about 35% of your credit score. Most strategies of improving your credit score become futile if you make late payments. The worst thing about late payments is that they can stay on your credit reports for up to 7 years.
The good news is that lenders don’t report bill payments a day or two late to the credit bureaus. You only need to be wary when your bill payments are more than 30 days late. If you’re having trouble keeping track of your payments, you can set up an autopay system through your bank or card issuer. You can also set up email reminders to alert you when the days are approaching.
While a strong payment history doesn’t guarantee a high credit score, it is an important part of building a healthy credit portfolio.
Aim For a 30% or Less Credit Utilization Ratio
One of the fastest ways to improve your credit is to reduce the revolving debt you carry. Your credit utilization ratio is the second most vital factor in calculating your credit score, constituting about 30% of your credit score. This ratio is measured by comparing your credit card balance to your credit limit.
Paying off your credit balances in full every month is the best way to ensure your credit utilization stays low. Running up huge balances on your credit card monthly can increase your credit utilization ratio, which will, in turn, lower your credit score. If you can’t pay off your balances in full and on time every month, you can try keeping your total outstanding balance at 30% or less of your credit limit. From there, you can plan to get the due balance to 10%, which is ideal for building your credit score.
Examine Your Credit Reports and Dispute Any Errors
It’s an intelligent decision to examine your credit reports from time to time. Any mistake on your credit report could be responsible for your low credit scores. Reviewing your credit report also allows you to find and dispute any errors, which will help you improve your credit score.
Use the government-approved AnnualCreditReport.com website to request your credit reports from any of the major credit bureaus and check for errors. These errors could include a credit activity that wasn’t yours or an incorrectly reported late payment.
Another way to request credit reports from the credit bureaus is by phone or mail. You could also take advantage of credit monitoring sites like CheckYourCreditReports.com, that make it easier to view and understand what is on your credit report.
It takes quite some time to complete the task of reviewing your credit reports and disputing any mistakes. However, the whole process is worth it, especially if you’re trying to boost your credit score ahead of a financial milestone.
Consider Credit Repair Software
Another way to build and improve your credit score is by using credit repair software. Credit repair software is a hybrid between seeking the help of credit repair professionals and doing it yourself. It helps you get through the long process of repairing your credit and helps you decide which debt you need to pay off to improve your credit fast.
Credit repair software is as effective as using a professional credit repair company and happens to be more economical. One of the best credit repair software for professionals and newbies is the CreditUp Club’s software. This software is a free, and advanced DIY credit repair service that allows you to get involved with the repair process. The software also has a user-guided interface that directs you through the credit repair process. CreditUp Club’s Software gives you the best of both worlds. You get a professional credit repair service at the DIY cost of $0.
CreditUp Club’s software is perfect for individuals who don’t have the budget to hire professional credit repair companies and need more hands-on experience than the typical DIY credit repair.
Join An Account as an Authorized Credit Card User
If you have someone with a credit card account with a high credit limit, you can join the account as an authorized user. Becoming an authorized card user adds the account to your credit reports. Hence, you can help your credit utilization with the account’s high credit limits.
With your authorized user status, you can enjoy the benefits of the primary user’s positive payment history. However, being an authorized credit card user isn’t like being a co-signer on a joint account. The original user of the credit card account has the authority to remove you from the card at any point.
How Can You Get a 720 Credit Score in 6 months?
There’s no guaranteed way to get a 720 credit score in 6 months. However, some strategies have been proven to help. Practicing some of the methods discussed above can set you on the path to getting a 720 credit faster. Increasing your credit score is great as certain credit score levels unlock some valuable benefits.
So, “is a 720 credit score good?”. The answer is yes. With a credit score of 720, you qualify to apply for a car loan. You can also rent an apartment with this credit score.
What Is The Importance of Good Credit?
Good credit is very crucial to most financial transactions you perform in today’s economy. Good credit can impact your success at performing certain monetary activities. It also shows lenders that your financial situation is on the right track. Before you can get a student or car loan, you’ll need a lender to extend you a line of credit you must be worthy of. However, bad credit will make it difficult for you to get a credit card with low-interest rates.
The benefits of having good credit are vast. You’re more likely to get a job or rent an apartment with a good credit score. Good credit will also give you access to easier credit approvals, better loan terms and lower interest terms.
Conclusion
Maintaining a high credit score is often easier than building it, so don’t let down your guard. It can be tempting to focus on other things once you have boosted your credit to a certain point. However, it is crucial to monitor your credit regularly to spot issues that might cause it to drop. Follow the strategies in this article, stick with them for a while, and you will see a change in your credit score over time.
If you’re interested in improving your credit at a cost-effective rate, check out our credit repair services at CreditUp Club. Your dispute letters will be ready in minutes with our state-of-the-art credit repair software. Join our club today!
