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Tips & Advices
Credit and financial tips to help achieve your goals
Spark Credit provides you with the resources and one-on-one assistance necessary to repair your credit, negotiate with your creditors and credit bureaus to manage your obligations permanently, and boost your credit score. We have the information and skills to achieve your monetary objectives for the rest of your life.
Suggestions to improve your credit score
You know that a better credit score can improve your lending options and interest rates. But what steps can you take to raise your credit rating? The following are five suggestions for improving your credit score.
1. Don’t be late with payments.
One-third of your credit score is based on how reliably you make payments, and minor inaccuracies might significantly impact your overall status. Late or missing payments will appear on a credit report for seven years and negatively affect a person’s credit score.
Suggestion:
Make sure you pay at least the minimum owing every time. To ensure you never miss a payment due date again, you may set up payment reminders and automated payments in your accounts. Check that you have sufficient funds in your accounts to pay your monthly commitments. In addition, once a year, you should review your credit reports and dispute any errors you find.
Through Mobile and Online Banking, Bank of America customers may schedule payments and reminders to pay bills automatically.
2. Reduce your balances and play it safe
The percentage of your credit limit being used is your score’s second most influential aspect. The portion of a person using their available credit is known as the credit utilization rate. If the rate is high, it might signal to lenders that you are dangerously near to exceeding your credit limitations.
Suggestion
Though having and using credit cards isn’t inherently negative, it is crucial to keep debt under control. To avoid interest, you should always pay your credit card balance monthly. Don’t be cheap; pay what you can if you can’t afford the total amount. Be sure your credit usage is under 30 percent. That implies a credit card with a $10,000 limit should never have more than a $3,000 debt. In addition, study the topic of credit restrictions to ensure your success.
3. Don’t close your old credit accounts
There is a correlation between the length of your credit history and the average period of your accounts. A better credit score is typically associated with a more extended credit history. You can reduce the average period of your accounts by canceling unused cards. The date of your previous card usage also affects your overall score. If you haven’t used a credit card in a while, the company that issued it may shut the account, even if you wish to keep it.
Suggestion
Please do not cancel your previous credit cards because you no longer use them. You may use them for inexpensive, recurrent charges, like a streaming service membership. Then, to avoid late fees, establish automatic or reminder payments. Consider carefully if you need to register a new account, as doing so will reduce the average age of existing accounts.
If you close an old account, the amount of money you have access to will decrease. Your credit usage ratio may increase, which can have a negative impact on your score.
4. Borrow money from multiple sources.
Lenders favor borrowers who handle multiple loans simultaneously. Credit cards and installment loans, such as a mortgage, car loan, or school loan that are paid on time, can help you build a solid financial foundation.
Suggestion
Opening additional accounts to increase your score is usually not a good idea. However, be aware of the many forms of credit to strategize your borrowing needs better.
5. Give it a thought before applying for Credit
It’s crucial to plan when applying for a new credit card because doing so might positively or negatively affect your credit rating. According to FICO, the primary credit score provider, those who create many credit accounts in a short period may be riskier borrowers. Your credit score may temporarily drop if you apply for a new credit card and the lender runs a rigorous inquiry into your credit history.
Suggestion
When applying for a large loan, like a mortgage, it’s best to avoid opening any additional accounts at all costs. Don’t go crazy with a brand-new credit card. By making fewer charges on your credit cards, you may be able to boost your score. And if you have a short credit history, a new card might help you build credit, provided you use it responsibly and make your payments on time.
You are on the right way if you have a history of timely payments and sound credit management practices. Understanding your credit score and determining it will help you take charge of your finances.