This is How You Can Effectively Increase Your Credit Score & The Amount of Time It’ll Take You to Actually See The Changes
One’s credit score or credit rating is a great measure of how well a person’s finances are currently doing. For example, having a score above the 700 is an indication of good payment habits while scores above 800 are more than excellent. In relation to these figures, the average person actually has a credit score within the range of 600 to 750.
If your score is currently a few or many points below the lowest of this 150-point range, don’t panic. There are many things you can do to reverse this situation over time. But before going into that, it’s important to know just why maintaining good credit scores matters.
For starters, this three-digit figure will determine many things in your personal finances. This score is one of the factors lending institutions, like banks and credit card companies, look into when deciding on whether or not to approve a person’s loan application. And, if approved, the same number will come into play when it comes to the interest rates a person will be given.
According to Rod Griffin, director for public education at the credit reporting company Experian, a mere 15 to 20 points could make the difference between being granted good borrowing terms or not being granted at all. This alone should be enough to encourage people to put more effort to raise and maintain good or excellent credit scores.
As a rule of thumb, some experts suggest keeping one’s revolving debt under 30% of their current available credit. This would make sure that one’s utilization rate won’t do harm on their overall score as it supposedly accounts for up to 70% of a person’s credit score.
Following this rule would lead to noticeable results after just a couple of billing cycles. Just note that missing a payment will likely cause temporary setbacks with multiple missed ones being harder to recover from.
Another thing people can do to raise their credit score is to refrain from applying for more credit. Asking a close friend or a trusted family member with good credit habits if they could add your name as an authorized user on their own credit card is also recommended. If they continue to make their payments on time, your score would benefit from it.
The Time It’ll Take
As to how much time it’ll actually take one to see the additional points these good habits bring to their credit score, there is no exact answer. The time would depend on one’s financial history. For example, consistently paying bills on time would appear in an increase in one’s credit score within six months.
However, missing or being late to pay one’s mortgage might take up to nine months to recover from. And bankruptcy is a whole other thing. Experts estimate that recovering from a filing of bankruptcy would take as much as 10 years to bounce back from.
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