Credit score can be influenced by a number of factors. But, there are some things that can lower your score like late or missed payments and collections. There are simple and free ways to improve credit scores.
Being punctual
One of the most important factors in building a good credit score is making on-time payments. FICO says that around 35 percent of your credit score depends on your payment history. It is important to pay at least the minimum on all your bills. If possible, you should make more each month.
Payment history
Your payment history is one of the biggest factors that affects your credit score. It accounts for 35% to your overall score. Your payment history tells lenders how likely you are to make payments on time. This is the most important part of your credit history, so make sure you pay your bills on-time. Even a few late payments will not destroy your credit score, so you should make a conscious effort to avoid them.
Credit utilization ratio
The first thing you should know about credit utilization is how to calculate it. Your credit utilization ratio is the total amount of credit you have used divided by the total amount of available credit. This number will tell you how well your debt management is working. The lowest credit utilization ratio is below 30%.
Diversifying your credit mix
One of the best ways to improve your credit score is to diversify your credit mix. It is important to maintain a healthy credit mix. However, it is also crucial to not over-utilize your credit. You should have both revolving and installment loans in your credit mix.
Apply for quick loans
The quick loan is designed to be available in emergencies. It may take several days for you to receive the money you need. They aren't as risky as unsecured loan, which can take up to weeks to approve. You could also borrow money through a friend or family member. Although this is more costly than traditional loans, it's faster. You will be required to sign a loan contract. It is a good idea to have an emergency fund, so you can quickly borrow money when you need it.
Charging off charge-offs or collection accounts
Charge-offs can have a detrimental effect on your credit score. They are generally kept on your credit report for seven year. It is possible to repair your credit and get a high score again. These steps will take time, but will allow you to make a positive impact on your credit report and score.