We live in a modern world where the use of credit cards and loans has become essential to afford the luxuries that we often take for granted. The modern banking system values our loan handling capacity in terms of a credit score. You require a rising credit score when looking for larger loans. There are many techniques that allow you to build up a strong credit history and move towards the kind of score that you would require taking a large loan to buy a nice home.
Here are some of the tips and tricks that come in handy when looking to build a strong credit score:
Managing Credit Card Balance
The use of the available credit card balance is the most important factor in measuring your credit score. This means that the use of the credit needs to be much smaller than the available limit. Many experts believe that it is better to always use less than 30% of the available limit on your credit card to get a good rating.
According to Pamela Banks, who is a senior member of the Consumers Union, it is best to keep the credit balances as low as possible. You can opt to pay multiple times a month in order to reduce the balances that are reported for calculating the credit balance.
Reduce the Number of Balances
Many people often use multiple credit cards just for the fun of it, although they are no way near the credit limit. This can hurt your credit score as the balance now appears on multiple cards. It is best to pay off the balances of different credit cards and just employ one or two cards that have a good interest. This will significantly improve your ranking.
Old Debt Reports are Good
Many people believe that it is not good to have the record of a large loan such as for a car or a home is not good and they get it removed as soon as soon as they pay off. In fact, these loans on the record are great for you, because they show that you are capable enough to take large loans and pay them back in an effective and timely manner.
This means do not worry about your previously paid debts on the credit history as it is good for your score in the long run.
Plan Your Purchases
Another thing that helps you achieve and maintain a better credit score is the planning of your loan applications. You must remember that each time you apply for a loan or buy an expensive item from your credit card, its effect remains on your score for at least a year gradually going down.
It is best to plan your loans such as those required for college, a car or a home to have the best chance of getting the loan approved due to better credit conditions.
A Final Word
These are just a few tricks that you can employ in order to have a strong credit score that is consistent and improves with the passage of time.…Learn More