Credit scores are not set in stone. They can change more often than you think, reacting to every loan application and every credit card payment. Though some lenders may still approve an application of someone with less than perfect credit, many types of loans require a decent credit score. For instance, many of the companies that are part of Money Mutual’s short term cash loan lender network, don’t require a high credit score and will approve applications regardless of an individual’s financial history. If you’re applying for a loan through a bank, however, you usually need a decent credit score.
There are several different determinants to consider when trying to improve your credit, some of which may not be immediately obvious. So, if you are wondering how to fix an ailing credit score, read below for a few rules to remember.
- Pay On Time. This one may be obvious, but it is also extremely important to a healthy credit score. Payment history accounts for thirty-five percent of your score, so consistently paying your bills on time is vital.
- Do Not Avoid Bills. Again, this may seem obvious, but if you haven’t been paying your bills at all, your credit score is even worse off then if you’re simply paying late. And if you continue to not pay, creditors may charge off your account, devastating your credit score even further.
- Check Your Credit Report. Knowing your credit score, and the information that was used to calculate it, will help you understand what you’re working with.
- Pay Balances Before They Are Sent to Collections. Once an account has been sent to a third-party collector, it will be a permanent fixture on your credit report. Even if you pay the balance, it may stay there for several years.
- Closing an Account Doesn’t Make it Go Away. Even if you close an account that you’ve had trouble with, it will still show on your credit report and influence your score.
- Keep Balances Low on Credit Cards. Accounts that have a high unpaid amount in relation to its credit limit will lower your credit score.
- Pay Attention to Your Length of Credit. How long you have been using credit cards and borrowing money makes a difference to your overall score – the longer the better. So if you’ve only been managing credit for a short while, don’t open too many new accounts at one time. If you have old cards, consider keeping the accounts open even if you don’t use them anymore.
- Do Not Avoid Using Credit. In general, using credit will increase your score over time, but only if properly managed. So you can take out student loans, payday loans, or credit cards as you need them, but be sure to pay them off in a timely manner.
