How to Enhance Your Credit Score

How Can I Increase My Credit Score?

You could present nicely worded profiles of yourself to prospective lending institutions to obtain a business loan, car loan, for college tuition or even a house; but the profile that a lender would be most interested in is your credit score, which would reveal to them a lot about yourself that you would not dare to tell them!

So your credit score should be something that you could throw at a lender and walk away with your loan. It would hardly be the case if your credit score were not good. This is where all the troubles start and end especially if you were a person who needed loans quite often.

What Does Your Credit Score Mean?

A credit score bundles up all your past financial history into a three figure score ranging between 350 and 850. It is a cumulative effect of all your timely payments, late and missed payments and having several credit cards stretched to their maximum limit and many other factors as well.

Credit Report Agencies

Unfortunately for errant borrowers and fortunately for lenders as well as good borrowers, there are three accredited credit agencies, namely Experian Equifax and TransUnion whose business it is to collect and maintain databases of all credit transactions taking place through registered lending institutions. So details of your transactions (good or bad) with any lending institutions are sure to be there. If you approach a lender for a new loan, he would get access to your credit card from one of those agencies to ascertain your creditworthiness before deciding to lend to you.

The said three bureaus provide all Americans in the United Sates with their respective credit records annually, which however do not include the credit scores. Those desirous of knowing their credit scores would have to obtain them online from their websites on payment of a fee.

If you do not have a good credit score, it does not mean that you are a goner for life, for you can always improve your credit score with determination and courage to make sacrifices in order to achieve your ultimate objective. We give below some of the key factors that make or break a credit score so that you could act on this knowledge to maintain or enhance your own credit score.

Timely settlement of bills

Lenders need trustworthy candidates to lend to who they think would settle their bills in full on the due dates. They need to lend to people with some financial discipline and responsibility who do not take loans beyond their capacity to repay on time.

Handling Credit Cards

An easy way to get an unfavoragle credit score is to go on making purchases up to the maximum limit of the credit card and then resort to tactics of making the minimum payment without making any reasonable effort to settle the bills involved.  Some may not even be content with having just one credit card, and may go for as many credit cards as possible to maximize the options available for super living far beyond their means, resulting in falling deeper and deeper into debt. This is not the type of behavior and attitude that lenders expect from their prospective borrowers, and you are not likely get any new loans approved until you raise up your credit score by limiting the use of several credit cards and sorting out the outstanding balances.

Having a good Credit History

You credit score will suffer more by any recent or current late and missed payments than by any such delinquencies in your long past history, the same way that your long past faults may be forgiven by somebody than your more recent wrongdoings. Having an unblemished long credit history will be just great for your credit score than just a short history, where in the latter case, the time is insufficient to make a valid assessment of your creditworthiness. If your credit is still new, your credit score should improve with time, provided you strictly adhere to the repayment schedules.

Obtaining New Loans

Applying for several new loans simultaneously from many credit institutions is bad for your credit score since it is a sign of desperation for financial aid which is seen by a prospective lender as a high risk prospect for lending. Again, the signs that emerge from this behavior are that of a man with little or no respect for good financial discipline or ethics of credit control. When applying for new credit, you should be careful and patient enough to do so one at a time if you are to maintain a high credit score.