How to get a good credit rating is the ultimate question for anyone with credit problems. If you’re desperate to improve your score, there are some really simple things you can do to increase your chances of getting a better FICO score. But you have to take action! The important thing to remember is that credit repair is like building an excellent professional relationship: You never think about it unless it affects your life. But if you do not have good credit right now, it is almost impossible to fix that situation overnight. That is why the best time to begin repairing your credit immediately – before you actually need it.
The first step you need to take if you want to increase your credit score is to make sure you always pay your bills on time. Late payments can seriously damage your score, even if it is not immediately noticeable. By paying on time, you send a clear signal to the credit bureaus that you are a person who can be trusted to handle your finances responsibly. And if you have a lot of late payment activity, this will definitely be noticed. The more responsible you are about paying your bills, the more likely your credit will improve.
Another way to increase your credit score is to have a low ratio of available credit to total credit available. Credit bureaus and loan officers use an available credit ratio calculation to determine your eligibility for loans and credit cards. This ratio measures how much credit you can potentially use before the lender has to turn to other resources to obtain money from you. Ideally, the available credit ratio should be no more than 45 percent, but you may not have perfect, available credit if you are just starting out.
Your credit utilization ratio is another way to increase your credit score. Credit utilization ratios are based on how much debt you have vs. how much you have available credit. If you have lots of debt but very few available credit lines, your ratio will look different from someone with much less debt and more available credit. This makes it easier for lenders to see you as high risk because of your high level of debt.
Finally, make sure you have a good credit score history and that it is consistently good. If you have missed payments in the past, or if you have made late payments in the past, this will reflect poorly on your credit history. If you consistently have a good credit score history, lenders will view you as less of a risk since you have been responsible for your financial information in the past.
A good credit score is important because it is one of the most important parts of your financial history. If you have a bad credit history, lenders will be hesitant to lend you money since you have a high chance of defaulting on a loan. This could lead to foreclosure. On the other hand, if you have a good credit score, lenders will view you as a low-risk investment since they know you will be able to make the payment on time.
This post was written by Kristian D’An, owner of Lux Credit LLC and CCA board certified credit repair specialist. Lux Credit offers credit repair services for those looking to improve their credit!