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Building Your Credit Score Is Not THAT Hard – You Might Already Be Improving Your Rating Unknowingly!

You may have not heard of the term credit score until you needed to borrow money for something pricey you’ve been dreaming about. It is a rating that measures how likely you are going to repay the money you owe a lender and which is between 300 to 850. The higher, the better and it should be stressed enough that you need to strive to have a good score because financiers will always consider this a factor in lending you funds.

There are a lot of perks that come with a high credit rating: your loan application has a better chance of being approved, you are qualified to have a low-interest rate, you may get a cell phone plan without a need for a security deposit, and you’ll have a higher credit limit.

On the other end of the spectrum, having a low score can be frustrating if you really need the money and it can sometimes feel the situation is hopeless. Thankfully, you can rebuild your grade in time. However, for some, there are things they unconsciously do that end up improving their scores.

Keeping a Low Balance

Your credit score varies on your utilization and behavior

Your bank will look at how you utilize your credit allowance. Maxing out your card and paying the minimum is not a good combination and will likely be the reason why you have a bad credit rating. You should have a healthy equilibrium between what you spend and the credit available. If you pay your balance on time, you will see an improvement in your score.

Having an Old Account

Little did you know that your old yet open account is a factor in the computation of your credit score. In fact, it makes a lot of difference if you have a long-running account that had not any big mishaps because it will send off a vibe to lenders and issuers that you are likely to follow the same behavior now.

However, if you have not been so keen on keeping your line on track for a high grade, just the fact that they remain open already increases the age of your account, which is an important part of attaining a good score.

If you have a secured card, ask your issuer if you could change it to a better one without having to open a new credit line. To keep your account open, you need to utilize it for at least a single purchase per year.

Having Many Accounts

Having many cards generally lowers your utilization average

It sounds wrong but having many accounts lowers your average utilization because you are basically dividing your purchases into your cards. Plus, if you’re using multiple cards, you are showing consistency and responsibility to lenders, who will find it attractive that you can sustain these at the same time.

Opting for a Car Loan

Instead of paying in cash, consider getting an auto loan

You may want to choose to secure a loan in purchasing a car even though you can buy one in cash. Yes, it does come with interest rate but credit unions usually give out good deals to those trying to build their credit because this type of loan is considered low risk — once you don’t pay your dues, your car gets taken away from you.

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