Do you find it difficult to establish a decent credit score? There could be several things you're doing incorrectly while paying your credit card bill. There are a variety of strategies to raise your credit score, some of which are more effective than others.
Your credit score ranges from 300 to 850 points, and yes, these three numbers represent your financial credit history, and yes, it matters a lot. A good credit score is between 670 and 799 points, which is the key to unlocking competitive interest rates on loans, premium credit cards, and easy home and car loans.
Below are some of the ways to keep your credit score always on track:
1. Use your Card Strategically: The amount of money you spend on your credit card at any given time is referred to as credit utilisation. There is a decent rule of thumb that you can follow if you are a big spender to assure greater results. It is to keep your credit card spending to no more than 30% of your credit limit. This would mean that credit would be used less frequently.
2. Always Pay on Time: Always paying on time is the most crucial component of establishing a solid credit score and history. If you don't pay your credit card account on time, no plan will work. Some late payment entries stay on your record till 71/2 years. Your record of paying your bills on time is the largest scoring factor in both the FICO and Vantage Score scoring systems.
3. Use Old Accounts and Credit Card: Even though previous credit accounts stay on your credit record, it's a good idea to keep them open. Your credit score's age-of-credit section considers how long you've had your account and credit card. While the credit history for those accounts will remain on your credit report, cancelling credit cards while you have a balance on other cards will lower your points and increase your credit utilisation ratio.
4. Review Your Credit Reports Periodically: It's critical to review your credit reports on a regular basis to ensure that all the information is correct and to spot any concerns that could harm your credit score. You can check or request your credit report from Equifax and TransUnion.
5. Understanding the Metrics: FICO and Vantage scoring solutions evaluation metrics.
· Payment history – 35%
· Amounts Owned – 30%
· Length of Credit History – 15%
· New Credit – 10%
· Credit Mix – 15%
If you're reading this blog, you're on the right track to improving your credit score, but keep in mind that good credit takes time to build. Simply considering your financial situation is the first step toward financial responsibility.
“It’s important to remember that every person’s credit journey is unique,”
Beverly Anderson, president of global consumer solutions for Equifax.
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