If you were checking out this post, it is probably because you have a credit score of 550. A credit score of 550 definitely does not mean you are not going to get a loan, but the process will be difficult. A good credit score is always the first priority imposed by loan providers whether it is a bank or a non-banking financial company. A good credit score check means 750, therefore a score of 550 it’s definitely not a good one. Yes, you can get a loan with a credit score of 550 only after checking out several loan providers, getting rejections, and high rate of interest. If you don’t want to face rejections or get an expensive loan, the ideal situation would be building a good credit score. It is true that it takes time to get a good credit score, but with good credit activities, you can soon get a score above 750. With a score above 750, it is easier to get any kind of loan at the best rate of interest in the market. Here’s how you can improve your credit score and eradicate all the possibilities of getting rejections and a high rate of interest with a credit score of 550.
Get a handle on bill payments
Bill payment is an important criterion in order to improve your credit score. Payment history takes around 25% of the entire credit score. It asks the biggest impact on your credit report which improves or damages your credit score thereafter. A very simple way to improve your credit score is to avoid making late payments under all circumstances. You can always create a filing system either digital or paper to keep track of the monthly bills you need to pay. Another important way is by automating the bill payment right from your registered bank account. Individuals can also set payment to give alerts so you know when the bill date is actually coming. Make sure you are not delaying your payment right after the due date. When you do so you not only damage your credit score but you have to pay extra charges as well. Simplify your bill payment and improve your credit score with a clean track record history.
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Aim for 30% credit utilization or less
The credit utilization ratio is the ratio between the credit limit that you are using at any given time. After payment history, the credit utilization ratio is the most important factor counted for credit report calculations. The best and simple way to keep your credit utilization ratio is by paying your credit card balance completely every month. If you cannot do it always, a good rule is to keep your total outstanding balance at 30% less of the total credit limit. From this, you can actually work on getting it 10% or less. If you are able to do this simple thing, you are soon getting a good credit score. Having a 10% or less outstanding on your credit card in comparison to the total bill amount and credit limit will actually improve your credit score. You can also use the high balance alert features that you can set on your credit card. Therefore, when you make a high purchase, it will eventually notify you. If you need more credit, you can always ask for the limit increase facility from your credit card issuer. When you raise your credit limit, you can actually keep a 30% limit unutilized. Learn how to get a business loan.
Limits your requests for new credit – and the hard inquiries with them
Are you randomly requesting for kind of loan and new credit options? If yes, you are actually inviting hard Inquiries with every application that you are applying for. There are common types of inquiries in your credit history which is referred to as hard and soft inquiry. A soft inquiry is when you check your own credit score or give your employer permission to check your credit. Soft credit score checks and inquiries do not damage your credit score. This says for a popular myth that credit score checking will damage your score. The real information is checking a soft credit score check will not harm your credit score at all. What harms your credit score is the hard inquiries run by various loan providers. Hard inquiries can also include applications for auto loan housing loans or a new credit card. If you are applying occasionally, they do not have much impact. What matters is the application of new credit within a very short span of time. If you are trying to improve your credit score, you need to stop applying for new credit when you don’t need it.
A credit score check is an important way to improve and monitor your credit score online. Initiate a free credit score check which does not damage your credit score at all.