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5 Steps To Improve Credit Scores

credit score picCredit score is one of the most important aspects of an American’s life today. Individuals who have good credit scores qualify for the best interest rates, thereby paying less finance charges on loans and credit cards. People can save a lot of money with low markup rates and that money can be used to pay off debts faster and invest elsewhere. Credit scores primarily depend on five factors:

  • Credit usage
  • Payment history
  • New credit inquiries
  • Age of credit accounts
  • Credit mix

People who file for bankruptcy observe a significant drop in their credit scores for obvious reasons. Similarly, paying your bills past the due date and maxing out your credit cards produces a similar effect. If your credit score is below 500, then applying for a loan is certainly a bad idea. Allow your score to surpass 700 before thinking about leasing a car or mortgaging a property. Here are five steps to help you improve your score efficiently:

1.   Start Paying your Bills on Time

Perhaps the sole reason for your dwindling scores is a habit of issuing late payments. Most late payments are subject to a surcharge, which means you are also losing more cash. You will have to establish a budget for your regular expenses, such as utility bills, internet, and T.V subscriptions. You must always keep enough money aside for paying your bills, so you are not fumbling for pennies when the time arrives. If you forget to submit your bills on time, set up reminders on your phone’s calendar. It may seem like too much extra work in the beginning, though you will eventually get the hang of it.

2.   Decrease your Credit Utilization

Credit cards are not your best friends, but merely an emergency fund. Do not consider them as a ticket to unlimited shopping sprees. Remember that it is not free money; you have to pay back every cent with interest later on. Primarily rely on your debit cards, and only turn to credit cards as a last resort. Your credit utilization must fall within 30% of your card’s spending limit.

3.   Do not Open or Close Credit Accounts

When your credit score is down in the dumps, do not close unused credit cards. This will increase your credit utilization ratio, thereby further deceasing your credit score. Do not apply for new credit either, as enquires too have a negative impact on the score. Managing existing credit cards shall be the only priority.

4.   Organize a Payment Plan to pay off Debt

credit repair with calculatorIf you are struggling with debt owed to multiple creditors, organize a reasonable payment plan to get out of the situation. Start by talking and negotiating with your creditors to set up an installment schedule that works well with your current income. Paying off secured and unsecured debts like utility fees, medical bills, student loans, mortgage, and pending credit card payments will readily improve your score.

5.   Always check your Credit Report for Errors

Sometimes a low credit score may seem unexpected, so you must go through your credit report to make sure. If you spot errors in your credit history, report them immediately. The entity in charge will make the requested corrections and recalculate your score.

Author Bio

John Adams is a paralegal who writes about widespread legal and social issues. He helps readers overcome challenges and solve many personal problems the smart way, rather than the hard way. He aims to reach out to individuals who are unaware of their legal rights, and make the world a better place.

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Customer Notice: Personal loans, title loans, and car loans have terms 6 months or longer. There are no early payoff penalties. We currently report to one of the 3 major credit bureaus, TransUnion. However, many factors affect your credit score. Therefore, we can't promise that your credit score will improve while having a loan with us.

Requirements: We are able to service Ohio residents only. Approval depends upon meeting legal, regulatory and underwriting requirements. America's Loan Company may, at its discretion, verify application information by using national databases, including but not limited to Teletrack and any of the national credit bureaus. America's Loan Company may take this information into consideration in the approval process. Due to state and verification requirements, not all applicants for loans may be eligible for approval by America's Loan Company. You may be required to submit additional documents due to state law and qualification criteria.

Products & Services: Products and services offered to customers may vary based on customer eligibility and applicable state and federal law. Actual loan amounts vary. The availability of loans and extensions may vary. Auto loans and secured personal loans are subject to minimum auto value requirements.

Further Personal Loan Disclosures: For qualified customers, America’s Loan Company offers bad credit personal loans with terms of 6 months to 5 years, with APR under 35.9%. As an example, you may borrow $1,500.00 over a 24 month period, with a $10.00 credit investigation fee, $100.00 loan origination fee, and $452.32 in interest, for a total payment of $2062.32, with an APR of 32.6514%, and monthly payments of $85.93.

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