Despite the pandemic, Americans are improving their credit. In fact, the average U.S. FICO Score increased to 716 last year.
While you don’t need a high credit score to get a loan, having a good score can make things easier.
So just how do you improve your credit score? Keep reading to learn more about how to build your credit and how fast online loans can get you instant cash while you work to improve your credit score.
If you haven’t checked your credit reports for errors, now is the time.
You have a right to a free copy of your credit report from each of the three credit bureaus. You should take advantage of this and check each of your credit reports for errors. A simple error could be lowering your credit score.
Common mistakes on credit reports include payments accidentally marked late, information that is out of date, and another person’s information mixed in with yours. If you notice any errors, you can dispute them.
Once they are corrected, your credit score may go up.
While you might not need to go through this process if you’re looking for fast online loans, it’s worth the time and effort in the long term. If you’re planning to make a major purchase in the near future or improve your credit score over time, you should start with this step.
Lowering your credit utilization will have a significant impact on your credit score. Your credit utilization refers to what percentage of available credit you are using on any card or line. Experts recommend keeping utilization as low as possible and always under 30%.
Your current balance when your credit issuers report to the credit bureaus is used to calculate your score. Try to pay down your balance each month before the billing cycle ends. You might also consider making several payments throughout the billing cycle to keep your balance low.
Set up reminders on your calendar or phone to ensure you make payments on time. Many creditors allow you to add alerts to your account to remind you when a payment is due and let you know when your balance reaches a certain amount.
Along the same lines, you can improve your credit score by increasing your credit limits. When you increase credit, you will instantly lower your credit utilization.
One of the best ways to improve your credit score is to start paying off your current debts. While this might seem obvious, many people don’t know that there is a strategy for paying off debts if you want to improve your credit score and save money on interest.
The first loan you should pay off is your most expensive loan. This means the loan or credit card with the highest interest rate.
When you pay off this loan, you’ll decrease the amount of debt you have as well as the amount you are paying in interest. After this loan is paid off, move on to the debt with the next highest interest rate and so on.
This strategy is called the avalanche method. The biggest benefit of following this strategy is that you can save on your overall cost of borrowing.
On the other hand, you might instead choose to follow the snowball method. With this method, you start by paying off your loan with the smallest balance. Then, you put that payment towards the next smallest balance and so on.
This method can help you build momentum and pay off debt quickly.
You should strive to pay more than the minimum payment required. Making extra payments consistently can help you pay off your debt as quickly as possible.
Check with your lenders about how additional payments will be allocated. Some lenders allow additional payments to be applied directly to the principal amount. Be sure to check the terms of your loan for additional fees or prepayment penalties that might apply.
Late payments are highly damaging to your credit score and that damage can be long-lasting. Paying bills on time is one of the best ways to improve your credit score.
If you miss a payment, contact your creditor right away.
If you can pay right away, do so. Ask your credit if they would consider giving you a pass and not reporting the late or missed payment to the credit bureau. Even if they won’t do this, getting your account current is critical for your credit score.
Each month that your account is marked as delinquent, your credit score takes a hit.
If you have any accounts in collections, get those taken care of right away. If you pay off what you owe, the collection agency may agree to stop reporting the debt to the credit bureaus.
While it might seem counterintuitive, adding a credit account that is in good standing can actually increase your credit score.
For example, if you only have credit cards, you could take out a loan. Doing this can improve your credit and lower your credit utilization.
If you have a limited credit history, a quick loan in good standing can have a significant impact. And getting an online loan is fast and easy.
While you can qualify for fast online loans without having a perfect credit score, it never hurts to work towards a better score. But sometimes you just don’t have time to wait — and you don’t have to!
We can connect you with a quick loan lender in as little as 5 minutes. Check out our website to get started and get instant cash today.