The high interest rates on loans and insurance that people with a low credit score pay are a strong incentive for having an excellent credit score and keeping it that way. Given below are 8 tips for getting a great credit score.
- The first step is to stay informed about one’s credit score so that remedial measures can be taken quickly as and when required. One can either acquire a credit report package or avail the facilities provided by a credit monitoring service. These services email reports regularly and also apprise the individual of changes in the credit score as and when they occur. Having updated information is the first step in planning for a great credit score.
- The FICO score of an individual is influenced to a great extent by the payment history and outstanding debt. Therefore, in order to maintain excellent credit, the key thing is to be up-to-date on payments and not have credit balances that are dangerously close to the credit limits.
- The length of credit history, number of enquiries by creditors regarding the credit score, and nature of credits being used are also influencing factors. A longer credit history stands an individual in good stead. If one is looking around for a credit card or a loan, the enquiry should be limited to a period of not more than two weeks so that the credit scoring companies treat the enquiry as a single enquiry.
- It is also important that an individual checks the figures on the credit reports and disputes any anomalies as these can have an adverse effect on the credit score. Creditors are bound by law to prove the accuracy of their claims within 30 days of a dispute, failing which they have to remove the inaccurate data from the report.
- Sometimes, lack of funds or poor repaying habits can result in bad credit history. It is important to have the bad credit history removed to increase the credit score. If the debts pertaining to the negative marks on the credit reports have already been paid off, it should be brought to the notice of the credit scoring agencies immediately.
- In order to appear a good credit option to a lender, one should always try to maintain a high ratio of current debt to the available credit limit. The available credit limit can also be increased by requesting the credit card companies to do so; however, one should avoid opening additional credit card accounts as it may have a detrimental effect on the credit score.
- Ideally, one should not be carrying any debt at the time of applying for a loan; however, if one does the optimum ratio of debt to available credit limits should be around 40% at least. One should not carry too many credit cards but there should be sufficient cards to maintain this ratio. While canceling, cards with higher interest rates and the most recent history should be canceled.
- An individual should get their names added to a partner’s credit card, if the partner has a good credit history. To get a good credit score, one should get a credit history in the first place, so if an individual has never had a debt to clear, he should borrow amounts that he can repay easily and in the process rack up a good credit score.
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