The credit history of a borrower is a base for lenders to extend loans to the borrower. Therefore, borrowers should position themselves where lenders will undoubtedly give credit to them without fear or favor. Their credit history should be flawless. Convincing a lender that you will repay the loan promptly is the key to winning the loan. It is up to the borrower to determine how to improve their credit score fast so they can secure opportunities to obtain even more credit and the lender to work in their favor.
What is a credit score?
The credit score model was designed by Fair Isaac Corporation and is used by lenders as a consultation tool amidst other credit-scoring systems that exist. The score is a range of numbers between 300 and 850 that portrays a borrower’s creditworthiness. The higher the score, the better it is for the borrower and vice versa.
Potential lenders consult a borrower’s credit history accounts before determining whether they offer credit or not. They assess the likelihood that an individual will repay loans successfully. The metric used to calculate a credit score is credit consumption or the current credit accounts availability percentage.
It is then in the borrower’s best interest to keep all accounts active and open to maintain their credit score and work towards improving it. Borrowers with credit scores below 640 are referred to as subprime borrowers. Lenders do not extend much credit to them as they are considered a greater risk than those with higher ratings. Borrowers with scores greater than 800 are considered excellent.
From a borrower’s perspective, your credit score dictates whether you will get approval to obtain credit and what interest rate you will be charged on the loan.
How To Improve Your Credit Score Fast
The following are some tips that can help a borrower to improve their low credit score fast.
Correct credit report errors.
As a potential borrower, always request your credit report from your agency. Print it and save it to your workstation. Scrutinize all the details. If there are late payments or unpaid bills, fix them as soon as you can with the respective agency. You may need to borrow for an emergency, but you will be out of luck if your credit report denies you the chance. By keeping track of your reports, you increase the chances of scoring high enough to obtain credit.
Become an authorized user.
If you’re unable to secure a loan on your own, you always have the option of becoming an authorized user on another person’s account. This can improve your credit score fast to leverage your reputation in the eyes of the lender. Ask someone with good or excellent credit if they are willing to entrust their account to you. Be up front about your intention to be added to their account to improve your creditworthiness and not necessarily to use their credit. The moment he agrees and adds you as an authorized user, you will earn confidence from the lender.
A three-month credit report will reflect the primary cardholder’s good credit history and this consequently improves your credit score.
Raise your available credit.
By raising your available credit, you improve your credit score fast enough to merit obtaining loans quickly. There are various ways of doing this and getting approved quickly.
- Do not be greedy or overly demanding. Make a polite, non-pushy request to your lender for a credit increase. If it works out in your favor, you will enjoy an improved credit score and obtain a fast approval for your request.
- Apply for a new card with a higher credit limit. A new card with a higher credit limit will entice your lender and secure your approval for a loan. You can obtain this by making an inquiry with your credit card issuer to increase your credit limit. If the issuer asks why you want a raise in the limit, be honest and explain that you want to improve your credit score fast.
- Plead your case, but do not be desperate to get approval. Seeking hacks to increase credit score fast does not mean that you should do anything for the favor. Do this only if you are unable to pay on your balances and retain a good credit score. This presents you as liable to obtain more credit in the future.
- Ask about a balance transfer. You can raise your available credit by transferring some of the balance from one account to another account. By increasing the account credit, your score will speak for you. Later, you can refund the transfer after receiving a better credit score.
- Wait for an increase to occur naturally. Get approved fast when your credit limit increases naturally. Through your upright payment history, repayment and borrowing, the credit agency will naturally increase your credit limit and alert you.
Reduce the debt-to-income ratio.
To improve your credit score fast, increase the amount you pay monthly towards your debt. This extra payment lowers your overall liability and gives your score a boost. Avoid taking on more debts that might be challenging to pay. Additionally, postpone large purchases on your credit card. These all play a part in improving your credit score fast in the eyes of your lender.
Negotiate outstanding balances.
Unpaid bills and debts can really deteriorate your credit score. You can rectify this by approaching your lenders and creditors to negotiate a way of repaying the debts. This agreement should be in writing. On the contrary, you can settle the debts by paying a large lump sum, resolving it, or revising payment plans with the debt settlement manager. This will repair your credit score and improve your credit score fast.
Make minimum payments on time.
If you aren’t already, start being consistently punctual in making minimum payments to your lenders. You may not necessarily have that lump sum available to offset your debt, but you can remain on top of the game by maintaining a timely payment schedule. The credit score calculator will not disappoint you. You can improve the credit score fast based on the amount you owe versus how much credit you have. Therefore, owe little and have a lot of credit for the ratio to work to your advantage. This ratio is the credit utilization ratio that favors a borrower who pays down debts quickly to lower the ratio and quickly improve their credit score.
Pay twice a month.
Potential creditors will look at your monthly statement to determine your credit score. Repaying your debts twice a month as opposed to once a month gives you an edge on your credit score. By reducing balances on revolving accounts, you will enjoy fast and improved credit scores.
Apply for credit only when necessary.
The main objective of obtaining credit is to address a financial need, an emergency, a development need, or other pressing issues. The lender decides on the risk of offering credit and that consequently impacts the rate of interest. Therefore, it is advised to apply for a loan only when necessary and avoid interest charges at the risk of being unable to pay back the loan. From a creditor’s view, a borrower who has a good reason for applying for a loan earns more on the credit score than one without. This also portrays a borrower’s good financial discipline.
Use your credit cards responsibly.
It is highly advisable to use your credit cards for needs and not wants. Avoid the common temptation to misuse your credit card and racking up credit card debt and you’ll also avoid the possibility of weakening your credit score. Observe these simple tips to use credit more responsibly.
- Learn your credit score and work on improving it regularly.
- Do not close all of your accounts if you want to maintain or improve your score.
- Never close accounts with high-interest rates as this reflects your inability to repay your lenders.
- Use credit cards for small purchases periodically. This displays your financial discipline and lenders borrow your eligibility information from this scorecard.
- Never skip a payment. Always honor your payments as in agreement with your creditors.
- Stay under 30% of your total credit limit. This will increase a creditor’s confidence in lending to you.
Request to have all negative entries removed from your credit report.
A history of late payments on your credit report looks bad to your lender. It may be tricky to obtain a loan or credit based on this bad report. Any unpaid collections and late payments will negatively impact your credit score and should be addressed. Understandably, presenting a credit report with negative entries when seeking consideration from lenders won’t have positive results.
The good news is, you can negotiate with your agency to have all negative entries removed from your credit report so you can present an excellent report to your lenders. Convince your agency to show the account as paid or remove it altogether to reflect the right image in your favor.
A borrowing credit journey is unique for everyone. The lenders rightly apply many criteria in deciding the creditworthiness of an individual borrower. Many factors affect the credit score for different borrowers, but all should be addressed regarding how they present themselves. The credit score should be subjected to each borrower and not wholesomely since the factors that apply to most borrowers will not always impact credit scores in the same way to another borrower. The bottom line is that each borrower is required to improve their credit score fast enough to secure financial legacy in the eyes of the lender. It is worthy to note that your credit score and an examination of your creditworthiness directly determines how much or how little you might pay for your loans.