If you’re not sure just why you should concern yourself with your credit score, there are a few good reasons to keep in mind. First, those with higher credit scores are more likely to get approved for financing and are offered the lowest interest rates by lenders. Second, lenders have tightened up their borrower criteria nowadays, making it more difficult for those with a lower credit score range to get the funding that they desire in order to purchase or invest.
Credit Score Range – What is Good and Bad?
A credit score is composed of three digits. It is a number of ciphers that tell banks and financial institutions how likely you are to pay your bills and debts on time. While there are different ways to calculate a healthy credit score range, it’s common that higher numbers equal better credit opportunities for you.
Your credit score is calculated on past credit reports, your current debt, and your overall credit history. To give you a broader idea of what a good credit score range is, here is the reference:
- 800-850: Excellent
- 740-799: Very good
- 670-739: Good
- 580-669: Fair
- 300-579: Poor
Related: 8 Debt Management Pitfalls to Avoid
Useful Tips for Credit Repair
Now, since you know the reasons that it pays to have good credit, it’s time to take action to achieve a quick credit repair.
1. Monitor Your Current Credit
You’ll want to start by actively monitoring your credit. There are numerous products on the market that can help you do this. The best will provide you with a daily credit score and send out alerts when there are any changes that happen.
2. Restore Your Late Payments
If you’ve suspended any of your payments with financial hardship programs lately, it’s time to learn when those benefits are going to be rolled back. You’ll need to plan your budget to address the bills that you’ll have coming in as these rollbacks take place. Getting up to date with payments is an important step to do some credit repair.
3. Refinance Your Debts
Having existing loans that you’re unable to pay due to a change in your income can turn tragic for your credit. Avoid the negativity by refinancing those loans while your credit is good. If your existing credit isn’t so good, you should consider auto loan refinancing with bad credit. According to Lantern by SoFi, “…applicants could qualify for a lower interest rate through refinancing—which could mean lower monthly payments and saving money in the long run.”
4. Keep a Credit Ratio of 30%
Just because you have a high credit card limit, that doesn’t mean you should always have it maxed out. In fact, having a stable credit utilization ratio can tell lenders and banks if you’re trustworthy when asking for credits or loans. With this in mind, try to always have a score above 0% but below 30% of the total credit. For example, if your credit limit is $500, try to never have more than $150 in debt.
5. Keep Your Old Credit Cards
When you finally finish paying off a debt with an old credit card, you might be tempted to close that account and keep the newer ones. You should, instead, get rid of the newer ones and stick to the older ones, as having a long credit history represents up to 15% of your credit score. Just remember to keep things simple and have fewer credit cards, but all in good shape.
6. Don’t Engage in New Credit You don’t Need
While it is tempting to acquire a new credit to help you fix your current finances, don’t fall into that trap. You’ll only grow your debt and mess up your credit score even more. Try and concentrate to repair your current credit and that means no new credit! This step is the hardest to follow but it’ll save you headaches in the future. You can think of new credits once your current debts are paid off.
Bounce Tips- How to Fix Credit Report Error
It’s absolutely crucial that you review your credit report on a frequent basis so that you can be alerted of any reporting errors promptly. These errors can be exceedingly harmful to your credit score and, therefore, your ability to be approved for credit when you need it. Fortunately, you can successfully fix credit report errors with the appropriate strategy.
You’ll want to write a letter to each of the credit bureaus that the reporting error is present on your credit report. The three major credit bureaus include Experian, Equifax, and TransUnion. Include an explanation of the problem and request that it be remedied. There are tons of helpful videos and services online that can assist you with fixing the errors on your credit report.
Reviewing and fixing your current credit score is more important than ever before. Positioning yourself to achieve and maintain a great credit score can help to ensure that you can receive financing whenever you need it, regardless of what’s going on in the world.