Main Methods in Building your Credit Score

With credit scores becoming an increasingly important part of people’s everyday life, maintaining a good credit score has become a necessary skill for modern times.

The better someone’s credit rating is with one of the main credit bureaus, the better off that person will be with existing and future credit applications for loans, credit cards, mortgages, insurance, employment and all other area’s of credit life.

Unless an individual is one of the few that has a perfect credit score (which is usually a numerical value of 850 from the major credit agencies), it is always worth trying to improve the score further to access better rates of interest on credit and more successful applications.

Here we look at a few methods in order to achieve that:

It is impossible to mend or improve credit scores if finances are still in a negative position. If a person is unable to pay bills and repayments are being missed, credit ratings will be worsened. This will only be reversible once arrears have been met and accounts are up to date;
If a person has little or no credit, it is possible that person will not even generate a credit score at all due to the low level of credit activity. To improve (or gain a credit score in the first place!) a credit score, more types of credit need to be issued to the individual and the accounts kept in good stead for an increase in credit score to be applied;
Be patient. Credit scores are not updated daily, or even weekly. Sometimes certain entries on a person’s report will not be updated until the individual in question requests it from a credit bureau. If significant amounts of a credit balance have been paid off however, then this is likely to be reflected on a credit score within about 30 days;
After obtaining a credit report, check every entry of the credit history to ensure that there are no old and out of date entries that could be removed but are in fact having a negative effect on the credit score. This could be a loan that has been paid off for example which is still showing ‘balance outstanding’ on the report;
Request a major credit card from one of the major credit card companies. Applying for a Visa, MasterCard, American Express or Discover card and using it sensibly by keeping payments up to date can be the difference of moving from the 600 credit score range to the 700 plus range. If the application is declined, consider applying for a secured card, whereby the perfect use of the card could result in obtaining one of the major companies cards within a year or two;
To stop the risk of late repayments which may harm someone’s credit score, consider arranging automatic payments from a bank account. This will ensure that deductions will never occur on the credit history for late repayments on a credit agreement;
Try and avoid disputes going to collections or similar departments. This on its own can have a very negative affect on a credit score;
When trying to build credit score – try and only use a maximum of 30% of the available credit at any one time if possible. Often it is the balance owed to a lender that is used as the data collected from a credit bureau which ends up on a person’s credit history;
Make sure credit cards are used. Even though using too much of the available credit is negative for building a credit score, so is not using them regularly enough. Try and place small charges to credit cards once a month and of course repay the balance on time;

Do not apply for too much credit at any one time. All applications for any credit end’s up as credit history on a credits report and has a negative effect.

Please note that the lower a credit score, the longer it will take to improve up the credit bureau scale. However it is possible for a person to move from a 350 level to a 750 level, it is only time and the user’s credit history that is the deciding factor.