What Are The Best Ways To Build Up My Credit Score?

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What will you learn

Why do I need a good credit score?

What factors into my credit score?

How long will it take to increase my score?

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Benefits of a Good Credit Score

Having a higher credit score, especially a 740 or above, increases your buying power by affording you access to the best rates on credit applications, lower overall cost on loans, and more. A high credit score is a quantitative measurement a lender uses to assess your creditworthiness, or your risk to repay. The lower the risk, the more likely a lender will be willing to offer you credit.

What Factors into Your Credit Score?

Increasing your credit score shows lenders that you are a reliable consumer and should have no issues with you as a customer. There are seven factors used to calculate your score, each with a different “weight” towards your overall score.

1. Payment history

Keeping your payment history current, with no missed payments or accounts in collections, will have a significant impact on your credit score.

2. Credit utilization ratio

Your credit utilization shows lenders how much credit you have available to you and ultimately factors into your credit score. Keeping your credit utilization low is likely to increase your score.

3. Number of accounts

Lenders like to see a variety of accounts on your credit report, which shows that you are an experienced, less risky customer. Having multiple accounts with low balances or no balance at all will look better to lenders than having one or two accounts with very high balances.

4. Credit history

The length of your credit history is also a factor in your credit score, as it gives lenders an idea of how much experience you have with credit accounts. Some scores factor in your oldest account, while others average the ages of all of your accounts

5. Credit mix

Having a mix of different types of credit accounts as opposed to having all of the same types of accounts is factored into your credit score as well. Opening a new account type can diversify your report and increase your score.

6. Inquiries

Hard Inquiries, or when a lender pulls your credit for an application, show up on your credit report. Multiple inquiries made in a short period of time can lower your score, so take time to consider if you need the line of credit before you apply. Soft inquiries, or when you view your own report, do not affect your score at all.

7. Negative information

Negative information pulled from public records, such as bankruptcy and collections accounts, make a definite impact on your credit score. These can stay on your credit report for up to ten years

When to Expect Changes to Your Credit Score

If you have already started making changes to improve your credit score, congratulations! It is not always easy, but each change you make can impact your score and, ultimately your creditworthiness.

Patience is key when trying to increase your credit score. Most institutions report to credit bureaus monthly, so there may be delays if you have recently paid off or closed an account for it to show up on your credit report. Likewise, when you apply for new credit, it may take time to see your new account(s) and how they affect your score.

Is It Worth It to Use a Credit Repair Company?

As you have read, many factors influence the determination of your credit score. Making small changes to your habits, spending less, paying back more debt, using less of your available credit, and more can all help to boost your score. However, it is essential to frequently review your credit report to make sure all the information reported is accurate. Even with the healthiest financial habits, your score could be decreasing due to an error on your credit report.

That's why our experienced professionals are here to assist you in reviewing your report, finding inaccuracies, and filing disputes on your behalf if needed. By working with our experts at Credit Helpers, you can make a game plan to achieving your best score and your strongest credit report possible!

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