Ways to Improve your Credit Score

The fact is that your credit score alone could disqualify you from the loan or increase the interest rate you will pay for your purchase. Additionally, if you have filed for chapter 7 bankruptcy (http://www.changandcarlin.com/chapter-7-bankruptcy) or foreclosed on your home, your credit score is going to need some work before you can get a loan.

This is why it is so critical to find ways to improve your credit score.

We are all familiar with what a credit score is, but very few know what goes in to the number:

• 35% of your score is dependent on your track record for making on-time payments. Making timely payments on your debts is an good habit to get into that will improve your score.
• 30% of the score comes from your debt-to-credit ratio, which is how much debt you have compared to how much credit you have.
• 15% of your FICO score is based on how long you have been building up your credit history. Blemishes on your credit record stay for as long as 7 years and will continue effect your credit score.
• 10% of your score comes from the types of loans you have. For example, a mortgage is considered a secure loan, whereas credit card debt is known as unsecured debt and is a less stable form of a loan. Secure debt is better received in your credit score because there is an actual tangible item backing the debt.
• 10% of the score depends on the number of credit applications you have recently filled out. Every time you apply for a credit card, car loan, or mortgage your credit report is pulled. If you are asked for your social security number on an application, they are going to pull your credit.

Since your credit score is a reflection on your financial standing as well as your financial capability, when applying for a loan, a creditor will review your credit score as a major qualifying component to determine if they want to give you the money. In most cases your credit score leaves room for improvement. Follow these tips to burgeon your credit score:

1. Acquire a copy of your credit report: Since you need to know what creditors will find when they pull your credit record, it is important to get a copy of your credit score and evaluate where you stand. A score above 600 indicates that you are in pretty good shape. Many creditors would consider giving you a loan, although there can always be room for improvement. A score between 500- 600 is decent, but needs some work. Anything below 500 is a red flag in the mind of a creditor. You need to take action to get your number up as soon as possible.
2. Combine your debt: Loan consolidation is a terrific way to simplify your debt. A consolidation loan will take your outstanding debts and combine them together into one loan with one monthly payment, which will improve your ability to pay off your debts and likely will lead to lower monthly payments.
3. Make loan payments on time: If you make the effort to consolidate your debt and make your payments on time, you are showing creditors that you are invested in paying off your debt.

If you are looking for ways to improve credit we can help you on that matter. Check out this website for further information on how to improve credit score.

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