10 ways to a better credit score n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
10 Ways to a Better Credit Score PowerPoint Presentation
Download Presentation
10 Ways to a Better Credit Score

Loading in 2 Seconds...

play fullscreen
1 / 27

10 Ways to a Better Credit Score - PowerPoint PPT Presentation


  • 3 Views
  • Uploaded on

Overlooking the importance of the credit score is one of the biggest financial management mistakes one can make. The credit score is basically the mirror of your financial responsibility, which is why banks and other lenders check the score of potential customers prior to lending them money. To learn more visit https://loansgeeks.com/ca/.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about '10 Ways to a Better Credit Score' - mike0shores


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
10 ways to a better credit score

10 Ways

to a Better

Credit Score

introduction

Introduction

Overlooking the importance of the credit score is one of the

biggest financial management mistakes one can make. The

credit score is basically the mirror of your financial responsibility,

which is why banks and other lenders check the score of

potential customers prior to lending them money.

This three-digit number tells lenders how likely you are to repay

a loan in a responsible and timely manner. A bad score, of

course, is not going to get you approved for loans very often

or, in case it does, it may cost you hundreds or thousands of

dollars in premiums, which you wouldn’t have to pay if you

had a good credit score.

It is in your best interest to keep this score as high as possible,

which will take some work and responsibility on your part. It’s

not that difficult to get a high credit score or even to fix a bad

one, but once you do get the score you are satisfied with, it is

important to know how to keep it that way.

Very bad

Bad

Fair

Good

700

Excellent

310

650

750

300

560

slide3

3

The credit score largely depends on your credit history as

one of the most important factors that show your financial

responsibility. The credit history is information based on which

lenders decide what loans you qualify for and what interest

rates you will be paying.

Every action you take with your credit is going to be presented

in your credit history. Some of those actions can affect your

credit history and score negatively, which is why you need to

put some effort into controlling your finance-related activities

to ensure a good credit score. Sometimes, of course, things

that are out of your control can affect your credit score

negatively, but you shouldn’t worry about that too much. Even

though you cannot control all situations, there are many ways

you can bring your score back up.

In a nutshell, the better your credit score is, the more likely you

are going to be approved for the loans you are interested in.

A high credit score brings along other benefits, such as better

interest rates and discounts on premiums. However, don’t stress

about your credit score being perfect, as it doesn’t have to

be. In fact, it’s nearly impossible to have a perfect credit score

all the time. Just make sure you are doing your best to pay

your bills and loans in a timely manner.

Here are ten things you should know if you want to keep your

credit score high!

Very bad

Bad

Fair

Good

700

Excellent

330

650

750

300

560

1 checking your credit report

#1

Checking Your

Credit Report

Checking your credit report is the first step toward improving

your credit score. People often confuse credit reports with

credit scores, so we are going to get that out of the way by

explaining the difference between the two.

A credit report is a detailed report of your credit information

including a history of your payment activities, balances,

bankruptcies, delinquent payments, etc.

Whereas, a credit score is a three-digit number based on the

credit report which tells your average score when it comes to

timely payments, debts and other credit activities.

It is important to check your credit report every once in a while

for two reasons. Firstly, the report will tell you how well you are

doing in managing your finances. This is important information

for you because you have to track all your credit activities

in order to maintain a good score if you’re planning to get

Very bad

Bad

Fair

Good

700

Excellent

350

650

750

300

560

slide5

5

a loan. Even if you haven’t thought about getting a loan any

time soon, you will still want to keep your score high enough

for future situations.

Secondly, make sure to check your credit report for errors, as it

can sometimes happen that there is an error in the data. For

example, there could be incorrect information on the report

that lowers your credit score, such as incorrectly listed late

payments or incorrect owed amounts on different accounts.

As they can negatively impact your credit score, make sure

to dispute all errors that you find, which can be done in the

credit bureau. Remember, the sooner you dispute all errors,

the better it is for your score.

Requesting your credit report directly from the credit reporting

agency will not affect your score, so you can do it as many

times as you want to. Make sure that you check it often,

especially after some major credit activities. To get a Credit

Report and check your Credit Score you can visit TransUnion

by clicking here.

Very bad

Bad

Fair

Good

700

Excellent

370

650

750

300

560

2 understanding the credit history

#2

Understanding

the Credit History

Your credit history is one of the most important factors the

potential lenders will be looking at when deciding whether or

not you’re a good candidate. The credit history lists all your

credit activities, whether good or bad. Therefore, you must aim

to pay your bills and loans on time in order to have a good

credit history.

Being late when it comes to payments has a very negative

effect on your credit history and the impression you are giving

to lenders. If they see that you have often been late with your

payments in the past, lenders are going to assume you won’t

be able to pay out their loan in a timely manner either and,

thus, won’t proceed to approve you.

If you are late to make one or two payments, that’s not a big

deal, but if you are constantly being late, that is definitely a red

flag for any potential lender who will be reviewing your credit

Very bad

390

Bad

Fair

Good

700

Excellent

650

750

300

560

slide7

7

history. If you are currently late for any payments, try to pay

those off as soon as possible.

Of course, everyone makes mistakes or isn’t able to pay

certain payments on time, which is okay if it doesn’t happen

too often. You don’t have to stress too much over a few late

payments as their effect on your credit history will decrease

over time. Older payments are less relevant than the recent

ones, so if you focus on correcting your mistakes, the ones

that you made in the past will become obsolete.

Another thing you should do is leave the debts you paid off

in a timely manner instead of getting them off your report.

These debts are also called the “good debts” because they

show you are able to pay off loans in a timely manner, just

like you agreed to do. Leaving the good debts on your credit

history is going to improve your score and make you a more

appealing candidate for future loans.

Very bad

410

Bad

Fair

Good

700

Excellent

650

750

300

560

3 automating payments

#3

Automating

Payments

As we stated previously, you should pay your bills and loans on

time in order to keep a good credit score. However, even when

there are justified reasons why some people cannot make

their payments on time, many others often miss it because

they simply forget about it.

This mistake happens when we are too busy with work and

other issues and have that payment slipping our minds

completely. Be aware though, that even if you are able to pay

it a few days or weeks later when you do remember, it will

already have created a bad mark on your credit history.

Therefore, to ensure that you won’t be making this mistake,

you can do one of the following:

1. Set up payment reminders — Some banks offer a service

called “payment reminders”. This is a very convenient

feature because you can sign up to get a reminder

Very bad

Bad

Fair

Good

700

Excellent

430

650

750

300

560

slide9

9

via text messages or email every time your payment is

due. That way you won’t have to worry about skipping

any payments and you don’t have to occupy your mind

with due dates.

2. Automate your payments

payments is another great way to ensure that you never

skip a due date. As the term suggests, these payments

are automatically debited from your bank account

through your credit card and loan providers.

Enabling

automatic

What can also help you to stay on track with all the payments,

is keeping a separate calendar dedicated to finances only.

This way, you will always have a clear presentation of all your

financial responsibilities and you won’t miss any, which will

keep your credit score high.

Very bad

Bad

Fair

Good

700

Excellent

450

650

750

300

560

4 how changes affect your credit score

#4

How Changes

Affect your

Credit Score

A credit score is never a stable, as it always prone to

change due to different factors. Specific actions will cause

your credit score to increase or decrease, depending on the

action itself. As credit scores are based on the information

from your credit report, any changes in the report will

immediately affect your score.

What you must consider is that one single thing can affect

multiple items on your credit report. For example, if for

some reason you decide to close two accounts that you

own, that action will not only lower the number of your

open accounts but it will also decrease the total amount

of available credit and increase your utilization rate, which

we will discuss later.

As you can see, one single action can cause a chain of

reactions, eventually leading to your credit score increasing

or decreasing. Therefore, you should be aware of the

Very bad

Bad

Fair

Good

700

Excellent

470

650

750

300

560

slide11

11

consequences that may take place if you make certain

actions that will affect your credit report. It is, however, difficult

to accurately foresee how one specific action will impact

one’s credit score.

If you’re not sure whether taking a certain action is a safe

move, make sure to check your credit report, consider

what consequences the action may cause, and if you’re

still not sure, get some advice from a professional. Either

way, you must know that the credit score is a number

that’s constantly changing in accordance to your financial

activities so you need to balance out your actions if you

want to keep your score consistent. With your credit score

report you will also get the list of credit risk factors, which

will give you insight into what kind of impact certain

actions might have on your score.

Very bad

Bad

Fair

Good

700

Excellent

490

650

750

300

560

5 finding factors that lower your credit score

#5

Finding Factors

that Lower your

Credit Score

As we mentioned above, each person’s credit score is different

and brings along different risks. Within your report, you will get

a brief insight into the factors that can lower your credit score

and actions that may be too risky to take. Of course, certain

factors are more important than the others, as they will affect

your credit score more.

In order to improve your credit score, you must check your

credit reports for the factors that have a negative impact

on it, and eliminate them in your future financial actions. It is

important to emphasize the process of finding these factors

as a crucial step in trying to improve your credit score. It is

possible that the report contains incorrect information and is

thus lowering your score, which is a common situation.

The two factors that are definitely most important when it

comes to credit score calculations are the payment history

and the credit utilization rate. Bad credit history has possibly

Very bad

Bad

Fair

Good

700

Excellent

510

650

750

300

560

slide13

13

the worst impact on a credit score and, if you find that to be

the factor that is lowering your score, you must start working

on improving your payment history as soon as possible. The

more positive actions you gather in your payment history, the

sooner your credit score will increase.

Other factors that may be lowering your score are late

payments, high credit balances, moving the debts around, etc.

What’s important to remember is that each person’s credit

score is affected differently by different factors. You have to

find what is causing your score to be low and work on those

specific factors.

Logically, to improve your credit score you must first bring it to

a decent level and learn how to be consistent with your actions

and at least keep the score in place, if not moving it up.

Very bad

Bad

Fair

Good

700

Excellent

530

650

750

300

560

6 reducing your debts

#6

Reducing

your Debts

One of the best things you can do to improve your credit

score is to reduce your debts. This sounds easier than it is,

but don’t worry, there is a process you can follow to get

there. Firstly, stop using your credit cards and get your

credit report.

From there, extract a list of all your accounts and recent

statements to see how much exactly you owe on each

account, as well as what interest rates you must pay.

With this information at hand, organize your budget to

start paying off those debts. Always start by paying off

the highest interest rates first.

You will find it easier to achieve this by putting aside as

much budget as possible for paying off these amounts. On

your other accounts, try to maintain minimum payments.

Some people keep moving their debts around, which

eventually causes their credit score to drop drastically.

Very bad

Bad

Fair

Good

700

Excellent

550

650

750

300

560

slide15

15

Instead of doing so, it is much better to actually pay off

those debts as soon as possible.

In some cases, people are having trouble paying off their

debts and making ends meet at the same time. If you

find yourself in that situation, it would be best to look for

a good credit counseling service to help you out with your

issue.

Reducing your debts and keeping the payments minimal

is going to have a great impact on your credit score.

However, if that’s going to cause you more financial

difficulties, you shouldn’t put all your money towards

achieving this goal but rather do it gradually. Starting

today, a step by step process is going to get you closer to

your goal. Besides, credit counseling services are always

available to clear out any confusions or concerns that

you may have regarding your credit status.

Very bad

Bad

Fair

Good

700

Excellent

570

650

750

300

560

7 controlling your balances

#7

Controlling

your Balances

Your balances say a lot about your credit responsibility. A very

important factor that impacts you credit score is the amount of

revolving credit you have versus the amount of credit you are

actually using. The smaller the percentage of this calculation,

the better it affects your credit score.

The optimum number you should go for is 30% and even lower

if possible. To achieve this, you should pay down your balances

and try to keep them low most of the time. If you have many

small balances on a number of different credit cards, it would

be best for your score to try and eliminate all of them.

You may want to get informed whether the credit card issuer

accepts multiple payments throughout the month. If so, you

would be able to improve your credit score by lowering down

multiple balances over one month. Something you should

definitely avoid doing is charging different amounts on different

Very bad

Bad

590

Fair

Good

700

Excellent

650

750

300

560

slide17

17

cards instead of charging one card for the whole amount.

For example, charging 60$ on one card and 40$ on the other

would hurt your balance more than charging the full 100$ on

the same credit card.

Lowering your balances is the first step to controlling them

and, once you reach that desirable goal, try to be consistent

with your payments to keep those balances in place. Besides

controlling the balances, you can significantly boost your credit

score by avoiding charging separate amounts instead of one

full amount on one card. The more you avoid things that sink

your credit score, the better are your chances to improve it.

Remember to gather information on all your balances and

start controlling them as soon as possible to get that score

rising faster.

Very bad

Bad

Fair

Good

700

Excellent

610

650

750

300

560

8 understanding the credit limit

#8

Understanding

the Credit Limit

Having a good understanding of the term “credit limit” is

going to help you find your way to boost your credit score

and qualify for the loans you are interested in. A credit limit

is the maximum amount of credit that a certain credit card

company allows you to spend on a single card. It is also the

maximum amount of credit an institution will lend you.

Credit limits are not the same for every borrower. Each credit

limit is set according to your information specifically. The thing

about credit limits is that they appear on your credit report

and, since the credit score is based on this report, the credit

limit is going to take part in forming of your credit score.

Some credit card issuers tend to increase one’s credit limit

over time and people are generally concerned about this

hurting their score. However, the increase of credit limit does

not affect your score negatively. In fact, it can help better your

score and this is why: the fact that your credit score is high

Very bad

Bad

Fair

Good

700

Excellent

630

650

750

300

560

slide19

19

but your balances low shows that you are responsible when it

comes to charging your credit cards, which lenders appreciate

and look for. This also helps better your credit utilization ratio,

which is very significant for your overall score.

The further away you are from maxing out your credit limits,

the more responsible you look in the eyes of the lender.

Besides maxing out on your credit limits, multiple lines of credit

on a credit report can hurt your score as well. If your credit

card issuer increases your credit limit you don’t have to ask

them to lower it because they are doing you a favor. Keep

the credit limit high and your balances low, as that is a great

combination for increasing the overall credit score. Remember,

the higher your credit limit, the bigger are the chances lenders

are going to approve you for desired loans.

Very bad

Bad

Fair

Good

700

Excellent

650

650

750

300

560

9 improving your credit utilization

#9

Improving your

Credit Utilization

Credit utilization is one of the major factors that affect your

credit score, right after the payment history. The above

mentioned credit limit affects your credit utilization, which is

another reason why you should be taking care of it. Your credit

utilization ratio is a result of a simple calculation: dividing you

total credit balances by your total available credit.

In this case too, the lower the result, the better it is for your

credit score. Therefore, it is best to have a low credit utilization

ratio when wanting to improve the overall credit score. 30% or

lower is the optimum amount you should be aiming for when

it comes to the credit utilization ratio. If that seems impossible

at the moment, don’t worry, start working on it step by step

and it will eventually lower down to the desired amount.

The reason why low credit utilization ratios are preferable is

because this information tells your lenders that you haven’t

Very bad

Bad

Fair

670

Good

700

Excellent

650

750

300

560

slide21

21

maxed out on your credit limits. That implies that you are

financially responsible and that you can manage your credit

well, which is what they look for in new borrowers. High credit

utilization ratios, on the other hand, tell the lenders that you

don’t really know what you’re doing when it comes to keeping

a good credit score.

When it comes to improving your credit utilization ratio, there

are two things you should know. Firstly, ensure your credit limit

is high while your balances stay low. If your credit card issuer

increases your credit limit keep it that way (we explained why

in step #8). Secondly, pay off your debts and consistently

track those balances to keep them low. We’ve also went over

that in the above sections of this guide. As long as you keep

consistently checking your balances and controlling them

while keeping the credit limit high, your credit utilization ratio

should work in your favor.

Very bad

Bad

Fair

Good

700

Excellent

690

650

750

300

560

10 using several different credit cards

#10

Using

Several Different

Credit Cards

Now here’s a thing, for some reason people think opening up

new credit accounts is going to improve their credit score,

which is not the case. Having several credit cards won’t

directly hurt your credit score, but it won’t do it good either.

What does hurt your score, however, is the way you handle

the credit cards you own.

Each credit card drags along its credit history, the payment

history and the amounts you will owe, which are all the factors

that indeed have a lot of impact on your credit score. With

a more than necessary amount of credit cards, you may find

it difficult to keep all these factors in check in order to maintain

your good credit score.

Upon applying for a new credit card, the company will have

to check your credit report, that is, make an inquiry that will

appear on your report. Those inquiries cost you a small portion

Very bad

Bad

Fair

Good

700

Excellent

710

650

750

300

560

slide23

23

of your credit score, from 2 to 7 points, so opening one new

credit card won’t hurt your score that much. However, if you

apply for multiple credit cards, you will see the difference in

your score. In addition, opening up new accounts will lower

your average account age, which also has its effect on your

credit score.

Therefore, don’t open new credit cards unless it is necessary

and especially avoid doing so in a short amount of time. You

don’t want to seem like a risky player to the lenders because

they usually put those aside or assign them higher interest

rates to pay. To keep your credit score fit, it is better to focus

on controlling the accounts you own, rather than opening up

a bunch of new ones because you think that may be good

for your score. Stick only to the accounts you need and invest

your time and money into those.

Very bad

Bad

Fair

Good

700

Excellent

730

650

750

300

560

what not to do

What not to do

Sometimes it is best for your score to simply stop doing

things that are keeping it down. Once you understand

which factors and activities are negatively affecting your

credit score, you will more easily pick it up and grow it to

the desired heights. So, what not to do when it comes to

taking care of your credit score?

For starters, don’t close your unused credit cards thinking it

may raise your score a bit. In fact, keeping these cards open

is doing a favor to your score because, as long as you don’t

use those balances, the unused cards have a good effect on

your report. As we already explained above, don’t open lots

of new credit cards just to increase your score because it

doesn’t work that way.

One of the best, yet most difficult, tips to implement is to be

consistent with your payments and don’t miss any. As difficult

Very bad

Bad

Fair

Good

700

Excellent

750

650

750

300

560

slide25

25

as it is to pay all bills in time, the more you do it the better it

is for your score.

If you see any errors or negative information on your credit

report, don’t ignore it as that is keeping your score down most

of the time. Instead, dispute all errors and try to work on the

negative aspects to bring them to the positive side. Last but

not least, don’t stress too much about keeping your credit

score perfect. Lenders aren’t looking for perfect scores, all they

want to see is that you know what you’re doing when it comes

to finances and that you’re responsible enough to pay all your

debts on time..

Very bad

Bad

Fair

Good

700

Excellent

770

650

750

300

560

conclusion

Conclusion

Altogether, if you’re hoping to get approved for new loans,

it is in your best interest to work on improving your credit

score. You can do so by following the ten tips we have given

you above, which you should start implementing as soon as

possible. Besides focusing on increasing your score, you should

focus on not lowering it any further as well. Therefore, avoid

doing actions that are bad for your credit status because

once they’re on your credit report, they’re going to stay

there for a while. Don’t stress too much about past mistakes

because more recent information always matters more than

old information. Thus, the better your actions are from now on,

the sooner your credit score is going to jump back up.

If you’re struggling financially and can’t get a hold of a good

score while fulfilling your other financial needs, you can always

turn to credit counseling services for help and they will find

the best solution for you!

Very bad

Bad

Fair

Good

700

Excellent

790

650

750

300

560