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How to Boost Your Credit Score

Your credit score is a three-digit number that, in part, determines your ability to repay debt, and ultimately defines your eligibility for receiving lines of credit. According to Equifax, credit boroughs calculate your score by weighing in the number and types of accounts you have, the credit you’ve used versus the credit you have available, how long you’ve had credit for, and your payment history.  

The bottom line? Having a bad credit score can be bad for business—especially when you’re looking to take out a loan. If your credit score is less than stellar, don’t despair! With a little TLC and patience, you can revitalize your score with these six tips.

Make Payments On Time

Reliability is a crucial factor that lenders review when they examine your credit report. By consistently paying your loan, bill, utility, rent, and phone payments/bills on time, you will appear more reliable, and the higher your score will be.

Missed and late payments will adversely affect your score and remain on your report for seven years. However, if you remedy your repayment habits, previous faulty payments will not impact your score so severely.

Pay Off Revolving Debt

Paying off revolving debt correlates with your credit utilization ratio. Your credit utilization ratio is the amount of credit you used versus the total amount of credit allotted. Having a low credit utilization ratio heightens your credit score because it indicates that you are not reliant on credit to get by, or unable to repay debt quickly.

Time Your Applications

Be careful not to apply for many different lines of credit at once. Every time you apply for a new line of credit, an inquiry is made for your credit score, temporarily lowering your overall rating. If too many queries are made at one time, a “hard inquiry” is made on your credit report. A “hard inquiry” can reduce your score and remain on your report for two years.

Keep Zero-Balance Accounts Open

As tempting as it can be to close an account that you no longer use to stave off a spending itch, keep your zero-balance accounts open as long as you aren’t charged annual fees.

Closing an account can result in a higher credit utilization ratio because even if you owe the same amount, you will have less unused credit. Plus, it’s optimal to have more credit available to use than not in the event of an emergency.

Clarify Inaccuracies

Check your credit report on TransUnion, Equifax, and Experian to be sure that there are no inaccuracies. Incorrect information on your report may lower your score, so you must dispute any errors you come across.

Resist Wiping Old Debt

Surmounting debt that has followed you around like a ball and chain is a huge victory. It’s only natural to want to wipe it from your credit report. However, if your payments were made in a timely and complete manner, keeping those debt records may work to improve your score as it demonstrates your reliability.

Though it takes time for an undesirable credit score to improve, all hope is not lost—even if you need a loan. There are lenders, such as Quontic, who offer loans designed for individuals with credit scores as low as 680.  Just try to stay the course and practice regular repayment habits. Eventually, your credit score will climb higher.

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