Did you know that it’s possible to get a credit card with cash advance or loans even with bad credit? Yes, that’s right. To do that you have to do a lot of deep research to find the lenders offering relatively low interests. These interests will however not be as low as those with a good credit score. You can also decide to secure the loan with valuable collateral.
Let’s pause it right there. Instead of going through the hardships of deep research, why don’t you just improve your credit score and enjoy easy loans with low interest?
But wait, do you have an idea of what a credit score is? If you do, you can skip the definition section. If you don’t, continue reading.
Credit Score- What Is It?
A credit score is a three-digit number that shows your credit reliability. It indicates your ability to manage your loans well through timely payments. Here are how the scores are arranged and what they signify.
- Scores below 620 – Indicate EXTREMELY POOR creditworthiness
- 620 – 659: Indicate POOR creditworthiness
- 660 – 699: Indicate a FAIR creditworthiness
- 700 – 759: VERY GOOD score
- 760 – 850: EXCELLENT score
Having a poor score is generally a bad thing. Loan lenders can reject your loan application if you have scores from 659 and below. If you manage to get a loan, which is possible, the interest rates will be quite high or extremely high.
One report shows that the U.S. consumers have risen the average credit score to 714 in 2022 down from 689 in the last 10 years according to the Debt.org report. This means that you should aim to find ways how to improve your credit score with figures higher than 714 to be on the safe side.
Scores between 660 and 714 are also not bad. You can get good loan terms with these scores but they won’t be as good as the ones with the high scores.
It’s important to note that credit scores are not the only factors to low interest. Other factors include the loan repayment time, whether the loan is secured or not, and the lender. However, it’s a great idea to have high scores on your credit reports. So, do you know how to improve your credit score? If not, let’s dive into it.
How Can You Improve Your Credit Score to 750 and Above?
1. Open an Account if You Have no Credits
If you have never borrowed any loan, the chances are that you have a low credit score. You do not have any reports of timely repayments or anything to show to a lender of your creditworthiness. To solve this, you can apply for a loan from a bank.
An appropriate loan for this is the credit builder loan. They are small unsecured, no-interest loans meant to build or repair your credit. You can also ask the bank for other loan types that can build your credit.
You can apply for at least three accounts. A good plan is to apply for one account at a time while paying for them. Once the six months are over, you can then get your credit reports from one of the three bureaus which are:
- Experian
- Transunion
- Equifax
2. Carefully Use Your Credit Utilization
Credit cards are great if you need instant access to money especially when you have credit cards with a $10,000 limit guaranteed approval. However, it’s a great idea if you use less than 30% of your total credit limit.
The amount you use concerning the full credit card limit is called credit utilization. If it’s possible, you can use as little as 10% to be on the good side. Make sure you make the minimum balance before the lender reports to the credit bureau. You can request these dates from the lender.
3. Run a Credit Report and Dispute for Errors
Running a credit report is free from the three credit bureaus. Once you have your report, keenly analyze it while looking for errors. These errors can drastically pull down your credit score.
Are there accounts in the reports in which you cleared the debts long ago but still appear in the report? Are there additional debts that are included that you have never applied for? Look for these errors together with others.
If this is difficult for you, you can ask for help from a professional. He can go through the reports while identifying the errors and giving advice on how to go about them.
Once you identify any errors, dispute them. Request for them to be detached from your report.
4. Pay Your Loans on Time
One thing to note is that late payments can stay in your report for 7 years. Hence, it’s a good idea to make sure you have paid your loans on time. You can set a reminder of the due date, through your phone if you think you’ll forget the payment date.
Some money loan apps have the benefit of showing notifications of the days remaining before the payment date is due. You can also set automatic payments on the minimum amounts from your bank accounts. Just make sure you make deposits to avoid cases of bank overdrafts. This is another cause of the drop in credit scores.
If you feel like you won’t manage to pay the loan by the due date, you can call up your creditor to ask if he can extend the payment period. Additional fees may apply in this case but it will be better than being recorded on your credit report.
If the lender declines, look for a way to clear up the debt. You can consider fixing your budget so that more money can be allocated to the debts or get help from friends and family.
5. Ask for a Raise in Your Credit Limit
We have already talked about using a small portion of your credit limit. Now imagine if your credit limit is increased and your monthly usage stays the same. Your credit utilization will of course reduce which will increase your credit score.
Ask your lender if he can raise your credit limit. This will of course be possible if you have a good history of timely payments.
Conclusion
Building your credit is not hard but it’s also not simple. Just follow the above steps and wait for your high results.
