In the year 2020, if
your yearly goal is to fix your credit score, you’re in the right place, This
will answer exactly, ‘How do I fix my credit score?’ However, stepping into
this arena to learn more comes with a fair warning that nothing you do can fix
or impact your credit score any faster than actually paying all bills on time
and using your cards judiciously.
What
is a Credit Score?
So what exactly is a
credit score? You might have heard your parents talking about it in your
presence at your childhood home. As an adult, it’s essential to understand the
world of finance, starting with the credit score. A credit score is just a numeric summary of
your credit history. It comes in handy as you grow older and are looking to
invest in property or don’t have a lump sum in your bank accounts to purchase a
vehicle etc.
A credit score is
commonly used by lenders to gauge the likelihood that you will repay your loan.
They use it to assess if lending you money is a possible risk or not. The
credit score also determines the amount of interest rate that you may be
charged on each debt incurred.
Credit scores range
from 300 to 850, 300 being a poor rate and 850 being excellent. The higher
one’s score, the most consistent they have been on making good with timely
payments and the lower the score - the lazier one has been in making payments
on time. Usually, any score below a 630 is viewed as problematic. For those
with a low credit score, the following are the few steps you should follow.
Here
are a few ways you can improve your credit score this year:
1.
Review
Your Credit Report: Each year at the
beginning of the year, one should take a quick look at one’s credit report, in
order to make an informed decision about how to tackle the credit score issue.
Each year, everyone is entitled to one free credit report and making an inquiry
will not have an impact on your credit score. If you’ve always asked yourself,
‘How do I get a loan with bad credit?’, then this is the first step. Before you
apply for a loan, have a look at your credit report.
Note:
If you ask for a credit report after putting in the applications for a loan, it
will deeply impact your credit score. So do it prior to putting in the
application request.
2.
Make
Payment reminders: If you are the kind of person who
is likely to forget paying up on time. Write down your deadlines for each
bill’s payment and make good on your payments by setting up reminders to pay
them all on time.
3.
You
could pay more than once in a billing cycle: Why
wait to pay up once a month in your billing cycle? If you start paying more than once in your credit cycle by paying
up every two weeks or so, you automatically lower your credit utilization and
it immediately increases your credit score.
How
long does it take to Fix Your Credit Report:
It usually only takes
about 6 to 7 months of a positive credit behavior to make a noticeable change
in your credit score. Even if you engage in hiring a credit repair, they will
not be able to proceed to make a drastic change overnight. It takes time to get
your credit score back on track.
Easiest
Way to Build a Good Credit Score From Scratch: Authorized User
The most overlooked
method of improving one’s credit score is by considering one’s credit
utilization. It makes up about 30% of your credit score. What is credit
utilization? Credit utilization is the percentage of credit available during a
billing cycle.
This is just a brief
comprehensive gameplan to fix your credit score in the year 2020 if you
have begun thinking about, ‘how do I get a home improvement loan?’ This is how
you can change your credit score and credit report this year.
