Before we discuss some easy ways to raise your credit score, let us look on how the credit score of an individual is calculated by various companies. The credit score an individual is calculated by checking these factors: on time or late payment of debts or financial obligations (35%); your length of credit history (15%); ratio of your current credit card balances to the total credit limits (30%) – that is the ratio of current revolving debt to the total available revolving credit; your types of credit used (that is whether revolving or installment) (10%); and your credit levels obtained in the past (10%).
This is the method by which financial institutions calculate the credit worthiness of an individual. Having a good credit score is very important as it is considered as the benchmark by financial institutions to decide whether to advance your credit or not. You can raise your credit score by focusing on each of these steps and by making on-time repayments for any debts you have made.
Let us explain in detail the different ways to raise your credit score.
One of the easy ways to raise your credit score is to start paying your bills on time. To earn a good credit score you need to pay your bills on time, any late payments can affect your credit score. If you have two bills, Bill X and Bill Y, and has only limited funds with you then it is better to pay the higher of the two so that it will cause less damage to your credit score. Also it is recommended to avoid declaring bankruptcy as it will affect your credit score for about seven years.
Lowering your ratio of revolving debt is another way to raise your credit score. For lowering your ratio of revolving debt you need to stay between 10 – 30% of your available credit limit on each credit line. Also try not to exceed 50% on any credit line.
Remember to keep your balances low. That is, huge outstanding debts on your credit cards can result in decrease of your credit score. So try to pay off your huge debts and keep your account balance low.
Try not to apply for credits frequently. When you apply for a credit an inquiry will be placed in your file. And if you apply too many new credit applications your credit score will decrease.
Closing an unused credit card will not help you to raise your credit score. But remember not to open many new credit card accounts to increase your available credit. Having so many credit cards is considered not as a good approach.
Having a few credit cards with reasonable credit limits and balances will help to raise your credit score. Remember to create a good credit history you need to keep your credit score always in a good position. It is not a huge task, make sure you all your outstanding bills pay in time and you have no huge outstanding debts in your balance. It may take some time to raise a low credit scoring, but you all need is your patience and your effort. At last, it is sure your effort is well worth the reward.