5 Tips on How to Get an Excellent Credit Score

A credit score is an analysis of your credit; it represents your creditworthiness. It relates to how likely you’re to repay your debts. 

Having a good credit score is beneficial in numerous ways, including lowering your interest rates on loans, and it’s a key factor that lenders consider when assessing your funding requests.

There’re numerous models of calculating credit scores, but Fico, one of the leading scoring agencies, puts an excellent credit score anywhere at 800-850.

In the article below, we shall highlight the top five tips for improving your credit score. 

However, understand that the journey of improving your credit score is not a sprint but rather a marathon. It will take time, and you need to be patient.

Always Pay on Time

First things first, always keep your debts in the green, and this shows the creditors that you’re responsible for your debt.

Experian states that payment history heavily influences your credit score.  It usually forms the basis and the most influential factor of VantageScore and Fico.

Remember that credit score is a reflection of your ability to repay your loan timely. From the creditor’s perspective, if you have an established history of timely payment, it’s a good indicator that you can handle your future debts responsibly.

Therefore, you would want to stay at the top of your payment and avoid issues such as late payments, defaults, repossession, or third party collections.

Anything that may indicate a non-performance of a loan, such as filing bankruptcy, is going to dent your credit score severely. 

While at it, it’s worth noting that staying on top of your payment not only applies to the conventional lenders, but also other entities such as bills, including utilities, rent, and cell phone services.

Optimize Credit Utility Ratio

Creditors often compare your credit utilization rate when determining your credit score.

Credit utilization refers to the amount of credit card balance compared to the credit limit.

Generally, the scoring agency recommends that your credit utilization stays below 30%.

There’re numerous methods that users can employ to shrink the balances owed while at the same time maintaining or increasing the amount of credit.

Here are some of the common methods of improving the credit utilization rate listed by Fundera;

• Paying more than the monthly minimum;  this helps to reduce the card balances
• Asking for a higher credit limit
• Leaving your card open after paying them off

Leave Old Debts On Your Report

I know it’s tempting that once you’re through with the student loan or even mortgage, you might get impatient and want to rid the loan from your reports.

But as long as your payments were timely and complete, no need to scrape them off.

In any case, they may have a positive impact on your credit score.

See, many of the lenders will usually go back in history to see your credit metrics and loan performance. And if you have an account with a long history and a solid track record of paying your loans promptly, it shows you’re responsible.

Regularly Monitor Your Credit

Human is to error, and at times, there might be inaccuracies in your credit report.

Regardless of whether they’re unintentional, they can derail your journey to a great credit score.

So, you must be always up to date with your current financial status.

Regular credit monitoring is necessary, and if you catch any inaccuracy on your credit report, you can file a dispute to the scoring agencies, and they will rectify.

Regular monitoring of your credit not only helps you to see all your financial accounts under a single roof but reviewing them may also be an incredible way of spotting inaccuracies or even instances of security theft.

Take Advantage Of Score-Boosting Programs

Experian and Fico are the leading scoring agencies in the market.

These two agencies have programs that allow consumers with thin credit profiles to boost themselves.

The Experian Boost program, for instance, will allow you to incorporate online banking data, utility payment, or even communication to your report.

While these programs will not improve your credit rating in leaps and bounds, it will still have a positive effect on your overall score.

Conclusion

Raising your credit score is easier than you think.

While the mentioned tips are by no means conclusive, following them religiously will see your credit rating improve in no time.