You need to tread carefully when looking to improve your credit score to avoid making a mistake. Having a great insight into what the process entails ensure that you do it right and avoid mistakes.
Your credit score is an important factor when looking to procure a loan to finance a large purchase such as a home or a car. A high score increases your chances of approval while entitling you affordable interest rates.
On the flip side, a low score saddles you with expensive loans carrying unfriendly terms, if you’re lucky to qualify. Working with a repeatable credit repair service in Miami, you can improve your score and snag better terms when getting a loan.
Understand what makes up your credit score
Your credit score is a summation of five different components that relate to your finances. Payment history, which explores the way you pay off your debts, account for a massive 35 percent of your score. Credit utilization, which is expressed ratio of how much debt you carry vs. your credit limit accounts 30 percent.
Your credit age, how long you’ve had credit accounts, weighs in at 15 percent. The type of credit, which is the variety of your credit account, carries 10 percent of the score. The number of credit inquiries on your credit profile makes 10 percent of the score.
Having a clear understanding of the components of the credit score is crucial as informs and shapes your credit repair journey. You get to understand where you’ve gone wrong and what you need to do to rectify the situation.
Understand there are no quick fixes
Well, you can have some quick wins it takes more than those to get into the higher echelons. The fastest way to boost your credit score is to identify and eliminate any errors that you find on your credit report. Naturally, the first step here is to request your credit score from the three main credit bureaus – Experian, Equifax, and TransUnion.
Go through each of the three reports looking for errors and inconsistencies. It’s not surprising to find mistakes in these reports. A 2012 study indicated that 5 percent of the population had errors on their credit reports that caused their scores to tanks. Raising the mistakes with the credit bureau gets them taken out, increasing your credit score.
The bureaus are legally mandated to respond to any errors you raise within 30 days. That means you can get a fair boost in your score quickly with this approach. You can take these corrective measures yourself or outsource to expert service.
Improve your financial situation
Correcting credit report errors can only get you so far. You need to address all the five components of credit score to boost your credit score past the optimal 700 mark. The most crucial thing to do is to keep current on all your credit accounts. Never fall behind or skip a payment as it only serves to lower and damage your score.
Take stock on all the open accounts and be sure to make at least the minimum payment on all of them. For the best results, you need to work out a debt repayment plan. That way, you can figure out a way to help you pay off most of the debts you carry. Such an approach enables you to lower your debt utilization ratio, which is instrumental in boosting your credit score as well.