Understanding Loan Terms

Understanding Loan Terms

How To Boost Your Credit Score Right Now

by Gregory Hall

It's often said that a great credit score takes years to build, and this is true. A perfect credit score does require years of excellent credit history. But, there are also steps you can take to increase your credit score by hundreds of points right now. Here's how.

Stop Trying to Get Approved

Many people fall into the trap of applying for credit cards or auto loans every month (or even sooner) just to see if they can get approved. Did you know that just sending in an application reduces your credit score?

New credit applications count for 10 percent of your total credit score, and for the best score, you should have none within the past two years. A few spread out months apart won't hurt too much, but many within a short period of time can hit you with the percent penalty that could turn your solid 700 credit score into a 630 that is unlikely to be approved.

Schedule Automatic Minimum Payments

Whether you're struggling with making your monthly payments, simply forget a bill on occasion, or have a perfect payment history, you need to schedule automatic minimum payments today. Top creditors won't accept even a single recent late payment, and if you have one, your credit score will drop severely to reflect that.

Using your credit card's automatic payment feature or setting up automatic bill pay with your bank can prevent you from ever having a late payment that drops your credit score and gets you hit with a fee. Just remember to make an additional payment to cover the full statement balance to avoid interest charges.

Pay Down Your Credit Card Balances

Your current credit card balances account for 30 percent of your credit score, and it's the easiest factor to manage. Only your current balance matters, so your credit score completely ignores that your cards may have been maxed out last month.

There are two things to watch out for:

  1. Individual card balances: A single maxed out credit card can tank your credit score even if all of your cards have zero balances. Don't spend more than a third of the credit limit on any one card.
  2. Total balances: If you have a small balance on a number of cards, your total balance may creep above the acceptable limit. Also keep your total balance under a third of your total credit limit.

To learn more about boosting your credit score, contact a local loans and financing company today.


About Me

Understanding Loan Terms

When I started my own company, I knew that I needed a little business capital and fast. In an effort to raise money, I worked with various lenders to discuss loans, financing, and special terms. Unfortunately, I quickly discovered that not every loan was created equally. Some loans had almost predatory terms like high interest rates and penalties, while others were completely fair. Fortunately, a business consultant of mine taught me about loans and financing, so that I could make better choices in the future. The information on this blog saved my business, and I know that it can help yours too.