Your credit is very important if you want to establish sound financial health. It will tell lenders just how responsible you are about paying your bills on time. And it will also help you in various aspects of your life, such as when you plan on buying a car or a house. And the better your credit score, the easier it will be for you to be approved when you plan on taking out loans. You will also enjoy many benefits of having good credit, such as low-interest rates when you take out a loan.
If you have a bad credit score, there’s still a chance for you to build it. One example is second chance credit by creditbono. But aside from that, there are many other strategies you can try. So let’s learn more here.
Take a Look at Your Credit Report
The first thing you need to do is review your credit report to know what you’re up against. Then, you can pull out your credit report from the credit card companies, and you will know what factors are helping or hurting your credit score. In addition, it will help you decide on how you can improve your credit score in the future, so you can quickly build it from scratch.
Pay Your Bills on Time
Accidentally missing a payment or not paying your bills on time is the most significant contribution to a low credit score. Even though you have been paying your bills on time for the past few months, missing just one payment can instantly make a dent in your credit history. Most lenders will base on your FICO credit scores, which are determined by five factors. These are the payment history (35%), credit usage (30%), age of credit accounts (15%), credit mix (1%), new credit inquiries (10%). Of course, your payment history is the most significant factor you have to take care of.
Limit Requests for New Credit – Only for Hard Inquiries
There are two types of inquiries, which are soft and hard. Soft inquiries don’t affect your credit score. These can be when you give your employer permission to check your credit, if you check your credit, or if a financial institution checks your credit, or credit card companies checking your file. The hard inquiries are what you need to watch out for, such as applying for an auto loan, a new credit card, or a mortgage. The lenders will think you need money, which is why you’re applying for these new credits. So avoid applying for new credit unless you really need it.