Good credit score is very similar to good health. Most people do not think about credit score until it starts having some problem. Credit score of an individual stands as the reflection of his or her credit history. It takes quite a good amount of time to build a high credit score though there are some short cuts that can be used. Maintaining high credit score is a continuous procedure. There are some effective ways that can help in building credit score fast and in ensuring that you are offered good interest rates in times when you are in need of credit.
What is Credit Score?
Prior to knowing the tips on How to Increase Credit Score Fast, there are certain basic thing that you should know. FICO score or credit score is a number that ranges between 300 and 850. This score is calculated using a kind of mathematical model and by the use of information available on the credit report of an individual. The number actually determines the creditability of the borrower. The higher the credit score, the better are the chances of a borrower in getting credit from lenders. Bad credit score will not only hinder an individual from getting loans but will also cause him or her to pay thousands of dollars in the form of interest rates. The tips that can help you in increasing credit score fast are as follows:
Pay all your Bills on Perfect Time
This is the very first thing that you need to ensure in trying to build credit score fast. This is a simple tip but there are many people who completely underestimate the significance of paying all their bills on perfect time. Lenders always want to known whether the borrowers have paid all their bills on time or not. This is the reason why 35% of the credit score of an individual is dependent on his credit history. Late collections and payments can damage the credit score of an individual severely. It is worse to have recent payment problems.
Keep Credit Card Balances Low
High amount of outstanding debt might bring about a reduction in your credit score. Your credit score might be lowered by around 70 points if you are maxing out on your credit cards. You can save yourself from this situation by using a number of credit cards. This will help you in transferring the balance from one credit card to another. This would further help in keeping credit card balances below 25% of the credit limits.
Do Not Close the Paid-Off Accounts
You can bring about a reduction in your total available credit by closing your old paid-off accounts. This will further change your utilization ratio which is the amount of total debt divided by the total available credit. The entire procedure might lower your credit score. You might shorten your credit history by shutting down the oldest credit accounts that you might be having. This makes you less credit worthy resulting in a drop of the credit score.