How to Hack Your Credit Score
Improving your credit score creates new opportunities and opens more doors for you – which includes home loan agreements, better home and loan interest rate and terms. Here is a guide on how to skyrocket your credit score.
Let’s Jump In
Owning your own home or renting an apartment is possible if you are earning enough money to do so. The only foreseeable obstacle you may face is having a low credit score.
Credit score reporting is done fairly and shows your financial ability to manage credit. Any facility that’s structured around you paying them on time will likely be want to know your credit score. Higher scores implies that the person is a safe and responsible person to lend money to and as such, – you will be able to negotiate better deals regarding the interest rates and terms. Getting a good credit score requires self-control and patience.
Understand Your Score
Getting a credit rating is based on your past transactions and are assessed by credit bureaus such as (Equifax, TransUnion and Experian). They use the information from banks and other organizations and calculate a figure which indicates if the borrower is likely to repay a debt in the future. They use figures of how well past debt has been paid over a period of 7 – 10 years.
Your credit score adjusts in proportion to your credit limit and your credit limit is calculated using 5 algorithms. It’s your understanding and deliberate utilization of these algorithms that will help you build and maintain good credit.
- Payment history- The percentage paid on time
- The account is adjusted according to your credit limit – What is the person’s borrowing status? Credit bureaus will ascertain the maximum limit and compute the percentage that has been used.
- Time allotment – This is how long a person has had one account with a credit card provider.
- Types of credit – Credit cards, automatic payments and alternative borrowing is normal and shows that you have planned payments on the loans you have. This alone can help your score.
- Number of requests – Every request is recorded and if you have lots of requests it shows that you have been rejected and trying other institutions to get a loan
How to Hack Your Score
- Know your credit score – By law, the credit bureaus are obliged to supply a report covering one year on request. A person can stagger their requests through the period of one year. You can visit the annual credit report by clicking here.
- Dispute issues– if you find a mistake you are allowed to challenge the entry with the agency that has made the error. What you need to do is use the appropriate documentations highlighting the errors and send it to the agency in question. The agency is obligated to investigate it within 30 days and send a free report if there was an error.
- The report keeps damaging remarks – If you have had incidents such as foreclosure or insolvency they will be kept on record for years and can be problematic.
- Resolve debt fast – Lower your debt and make sure that the debt does not increase, rolled over or debt changed to another lender.
- Improve number of payments done on time – This is a major factor because you cannot improve your credit score by not paying on time.
- Increase your credit limit with the lenders – Once you have started lowering your debt ask the lenders to increase your borrowing limit. This improves the ratio of balance to the credit limit.
- Spend less – Avoid any extra spending using your credit card and cut back on unnecessary expenditure.
- Open new accounts carefully – Trying to open new accounts can affect your period of time score if your applications are rejected. Therefore, avoid opening new accounts until after you have a good credit record and only when opening a new account could be helpful.
- Increase income and lower debt – This is not a major issue but will help to show that you have the ability to pay back the money.
- Do not close credit cards that have been paid – Keep them active to help your overall score and the records history
- Consult debt relief experts – If you are unable to lower your debt, think of getting advice from debt counselors. Enroll in a trusted program like the US Debt Help Foundation.
To have a good credit score you will need to be patient, responsible and have self-control. After some months you will notice the numbers go up and that will put you in a position to be classified as a “low-risk borrower.”