Before we look at ways to improve our credit score, we must first understand what is a credit score? A credit score in simple terms is an estimation of an individuals creditworthiness, which is arrived at by using a mathematical estimation based on a detailed analysis of ones credit files. A high credit score is considered as more creditworthy and thus availing a loan available is much easily and is also faster as lenders are ready to lend out money. A low credit score might lead to a rejection of a loan or even if it is granted, it is at a higher rate of interest as the lender feels it to be more risky.
Fair Isaac & Company popularly known as FICO came out with the mathematical calculation based on which the credit score and the credit score range can be determined which will help borrowers decide whether loans available.
Let us understand circumstances or situations which affecting the credit score. The need for credit usually arises when one spends more than what they earn. This leads to a situation when the expenditures exceed the income and thus one is unable to repay and thus the credit rating is at jeopardy.
There are a number of ways by which one can improve the credit score but prior to that one need to find the credit score, and then opt for a good company which can help repair the score.
Opting for a credit card if one does not have it, will also help push up the score. If a regular credit card is not allowed at least, opting for a secured card wherein one is allowed to use up to the loans available on the account will help.
The next thing one can do to improve the credit score is check the reports well for any kind of inaccurate information or errors. Paying off revolving accounts will help improve credit scores faster.
The next option is to increase the monthly payments and also set regular reminders to pay off the bills on time. Effort needs to be made to increase monthly payments, and also manage to keep missed payments low and stick to current payments and stay on current mode only. However this is the most difficult option.
Efforts should be made to repay all the small debts. After the credit score starts improving the borrower should attend counseling sessions provided by the companies to understand and maintain the credit score and make sure that loan is available. These companies coach to keep a balance between the income and the expenditure as well as the loans. By doing these the credit score will never go down.