Read these tips on how to get higher credit score so that you can be approved for loans, get the best mortgage rate, and don’t run into any problems with your credit score. Keep reading to find out more.
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Get Higher Credit Score
Read these 5 tips on how to get higher credit score. Make sure you follow along and you have to be patient because your credit score will not improve overnight. It will take months for a credit score to get to a high number depending on what credit score you have currently.
1. Payment History
Your payment history determines more than 1/3 of what your credit score is going to be. Basically it the biggest factor in determining your credit score and how to get higher credit score. Basically, you have to pay your bills on time and never be late or miss a payment. If you have missed a payment or have been 30 days late in a payment, it will show up on your credit report for 7 years. It takes 7 years for that negative to drop out of your credit report. In that case, there is nothing you can but wait for it to come off.
If that negative on your credit report is not your fault, or if it’s inaccurate, you can try to dispute it. If it’s inaccurate, you need to write a dispute letter in writing and send it via certified mail to the creditor. They will legally have 30 days to investigate it and reply back to you, also in writing.
Luckily, if you do have a negative, it starts losing it’s momentum after 3 to 4 years. The first 3 years it will greatly affect your credit score, but after year number 4, it starts to recover a bit and your credit score can get higher. But it is important that you must continue to pay your bills on time and not miss a single payment.
2. Debt Ratio or Credit Utilization Ratio
Your debt ratio, or also known as your credit utilization ratio, makes almost a third of your credit score. This is the amount of debt you owe each month divided by the total amount of credit you have available. For example, if you have a credit card with a $5,000 limit and each month you carry a balance of $2,500, you will have a debt ratio of 50%. This is a really high debt ratio in this particular case. What you will need to do is lower that ratio to 30% or lower. You can do that one of two ways: pay off your debt and don’t carry a balance, or spread it across different cards so that all of them have a debt ratio of 30% or lower.
3. Length of Credit History
The third tip on how to get higher credit score, you don’t have much control over. The length of your credit history is about 1/6th of your credit score. You can do nothing but wait for your credit history to build. You do this naturally by paying off your bills on time and not missing a payment. Do not take out a loan or debt for the sole reason to build a credit history. That is a waste of time and money. These things happen naturally.
4. Types of Credit
Make sure you have a healthy mix of credit cards and loans, but this isn’t as important. You don’t need to go out and get a loan because of this.
5. Number of Credit Inquiries
Last but not least, do not apply for a bunch of loans and credit cards all at once. This will lower your credit score.
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