How To Improve Your Credit Score To 800 And Higher?
So you’re probably wondering how it’s possible to get a prime rate for your credit score. This is something most people seek. After all 90% of banks use this score.
So let’s talk about the factors that go into a perfect credit score.
Your History of Managing Credit
One of the first and largest components of the credit score is your history of managing your credit. The truth of the matter is that even one missed payment can be taken into serious considerations when you’re attempting to maximize your credit score. It only makes sense; this section alone makes up 35% of your credit score. Furthermore, one account that goes into collections can end up dropping your score by 100% for seven entire years.
Credit Utilization Rate
The next thing people need to be aware of is credit utilization rate. Your credit utilization is a large determining factor on your score, the more you use the higher the impact on your score. According to FICO’s algorithm the higher your utilization rate, the more points will get shaved off your overall score. This is quite impactful and why it’s important to have a utilization rate of under 10% at all times of your total overall available credit.
Length of Credit History
The next major factor on this list would be the average length of credit history. Look there’s a saying we really like in the world of finance which is “when is the best time to plant a tree” the truth is 5 years ago, the second best time is today. So having multiple accounts open where you’re managing lines of credit is actually extremely beneficial to your overall credit health.
What we find happens most is a lot of young people realize they need to start building their credit history when they need it most. So they may only have 2-3 lines of credit open, and even if they are aged 6 years, their average age of credit will be slashed in half with just 2 new lines of credit.
So the sooner you can start opening new lines of credit the better because the idea is, the longer you age your line of credit history the stronger your history will be.
Conclusion
You’re now able to see what a good credit score is made out of, and the benefits make it much easier to receive your loans at rates you can afford, other than having to seek loan sharks or other dodgy forms of loaning. That said there are still verifiable lenders out there whom will give you loans with bad credit, and in that case you may want to check financer.com’s loans for bad credit section to see what rate fits you the best!
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