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Boosting Credit Score

Boosting Credit Score

Boosting your credit score can feel impossible. That is because while lowering your credit score can happen with a single missed payment, improving your credit score can take time. Fortunately, we have a few steps you can take to quickly boost your credit score.

Why is credit score important? Well, obviously the better your credit score, the better your credit opportunities. That not only means your ability to get loans, but also the interest rate you pay. Over the life of a loan, especially a long-term loan like a mortgage, a better credit score can mean tens of thousands of dollars in savings.

Of course, you want to avoid doing anything that can lower your credit score and use your credit responsibly. You want to:

  • Make your payments on time
  • Avoid using more than 30% of your available credit
  • Check your credit score for inaccuracies

It can be tempting to use all of your available credit. However, creditors will often give you more credit than you can actually afford. If you use all of your available credit, you not only lower your credit score, but also leave yourself vulnerable if you have a financial emergency. So, strive to keep your credit usage to 7% to 30% of your total available credit.

To fix your score, you need to know what is hurting your score. The first step is checking your credit score. There are two credit scoring models FICO and VantageScore. You will probably receive a FICO score. For FICO scores, a score above 800 is exceptional, a score of 670 or higher is good, 580 to 669 is fair, and below 579 is poor. Unless you have an exceptional score, you could always improve your score.

Once you know your credit score, you want to look at your credit usage history. Your credit score is calculated with your payment history, the length of your credit history, your credit utilization, the types of credit you use, and any credit inquiries.

Many people think that they have the most control over their credit utilization and that paying down their bills is the only way to improve their credit score. However, checking your credit report and disputing any inaccuracies in your payment history is another great way to improve your credit. You can also improve your utilization percentages by increasing the total amount of credit you have. You may be able to do this without any additional inquiries if you get current creditors to increase your credit line. If you are paying off credit cards to reduce your debt, you may be tempted to close old cards. However, older cards establish a longer credit history. They also increase your total available credit, lowering your utilization rate and possibly boosting your credit score.

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