How to Improve your Credit Score by 100 Points
When your credit score is high, lenders will view you as a low-risk customer and will be more likely to consider your application. A good credit score suggests that you are able to make repayments on time and that you are managing your existing credit responsibly. It is important to establish an impressive credit rating because it will have an impact on whether you are able to borrow the amount of cash you need. A better credit score will also encourage companies to offer you lower interest rates for a loan. This is because your credit score shows them that you have made consistent repayments on time and without any issues.
Each of the main consumer credit reporting agencies use a different scoring system. For example, at Experian your rating is considered “good” if you achieve a credit score of: 880 out of 999, while at Equifax, a credit score of: 420 out of 700 is “good”. If you make the effort to reach these target ranges, then lenders will provide you with some of their best-value offers.
It won’t cost you anything to find out what your current rating is, and if the news is not good, then don’t despair there are several ways to improve your credit score. Top of your list should be checking for any mistakes that may have found their way onto your file, followed by spending far less than your credit limit allows and, finally, paying your bills on time.
Make sure your credit report is accurate
Ideally, your credit report will be a true reflection of your financial history, but even a small error can affect your credit score. Take the time to go over every detail that has been recorded about you and your payment history and then promptly challenge any mistakes. Start by making a report to the agency in question. This will advise them to mark the entry as “disputed”, and lenders will be aware of the dispute when looking at your file. They have to remove the mistake within 28 days or let you know why they disagree.
For more complex issues, including if you are not listed as working, but you are now in employment, credit reporting agencies will accept an explanatory statement from you of no more than 200 words asking for a revision. When an item is out of date in this way, a “notice of correction” can be tagged on to your credit report to make lenders aware.
To keep up with any changes on your file, Monevo recommends obtaining a free credit report from a couple of key reference agencies – try starting with Experian or Equifax. This will ensure that you can spot any new errors and deal with them quickly before they have a significant impact on your credit score.
Remain under your credit limit
We all have an allocated credit limit, which is shown on our report. The amount of credit you have used compared to the amount of credit limits you have been extended by a lender is known as your credit utilization. You can improve a rating quickly with a low credit utilization of around 25% because it shows that your current level of debt is under control. If you are over the 25% mark, then there are a few ways to chip away at that percentage.
You can start this process by looking at the credit cards where you have borrowed the most money from and if possible, try to pay off a few extra hundred dollars over your monthly payment. For example, if you come into a work-related bonus or any other type of monetary gift, then think about paying off a lump of this debt rather than spending it. Every extra payment above your monthly minimum amount will have a positive impact on your credit utilization figure. If you cannot spare any cash, then try reorganizing your debts with a consolidation loan. A consolidation loan is the process of combining all of your unsecured debts into one monthly payment. This can be beneficial because a consolidation loan can offer more favorable payment terms such as lower interest rates, lower monthly payments or possibly both. You can also shop around and find a better interest rate than you are currently on, so it will take you less time to clear the balance.
On a credit card with less borrowing, always make the minimum monthly payments, but work towards using it as a debit card. If you commit to clearing the balance each month, then you will only spend what you can afford.
Finally, you could ask your credit card provider for an increase in your credit limit. If your credit card limit does increase, this will immediately lower your credit utilization percentage. It’s important to remember that if your credit card provider does grant you a higher limit to keep your balance the same and to avoid spending more.
Settle your payments on time
When you are not in control of your bills and you miss monthly payments, your credit score will suffer regardless of any other action you take. Your payment history is the most important thing that lenders look at, as they do not want the inconvenience of chasing people when their payments are behind.
Even if you have failed to make regular payments in the past, you can begin to turn things around by getting up to date on payments as quickly as possible. Each month that you fail to pay is marked as a negative on your credit score, and the longer it continues, the more damage it does. If you can demonstrate that you are able to manage your outgoings successfully, then lenders take this as proof of your reliability in paying back your future loans on time.
If the problem is more to do with forgetfulness than cash flow, then Monevo suggests that you sign up to receive text or email reminders from your credit cards or loan providers just before your payment date. Alternatively, you could set up a direct debit to take care of it every month to ensure onetime payments are being made on your behalf.
How easy is it to improve a credit score by 100 points?
Although everyone has a unique credit history, by staying on top of your finances and tackling any issues on your report, you can work towards your own best score. Fortunately, when your rating is quite low, you can move up the scale faster than someone with a stronger history who is just trying to lift their rating by a few points. This is because you have so much further to travel and each change you make will have an impact. Things move quickly because most providers submit reports every 30 days, which means that the work you do today could be reflected in your overall credit rating within a month.