Got A Low Credit Score? Here’s How You Can Raise It & Exactly How Long It Will Take
Also known as credit rating, the credit score is a three-digit number which determines a person’s likelihood of being approved for credit by institutions like banks and credit card companies. This said it follows that higher credit scores are considered better.
According to Experian Information Solutions, anything above 700 is considered good while a score exceeding 800 is excellent. In reality though, most people have a credit rating of between 600 to 750.
There are many things which can affect a person’s score for better or worse. For example, simply missing credit payments can set one’s credit rating back. Read on to know just how important keeping a good credit score is and find out how your score can bounce back after a setback.
The Importance of Credit Rating
Because your credit rating will determine the interest rates you’ll get when applying for loans or paying off credit cards, having good credit can easily save you thousands of dollars as time passes. What more, a mere 15 to 20-point shift in your rating can cost you the difference of being approved for better terms or being completely declined on a much-needed loan, according to Experian director Rod Griffin.
While you’re score is currently down at the moment, it’s worth noting that the average credit scores today have consistently risen since their low when the last financial crisis happened some ten years ago.
It Takes Time
According to financial experts, the time it will take to recover one’s old credit score after a recent decrease will vary. For example, running late on a payment on your mortgage, considered one of the more serious offenses, can take a person around nine months to correct.
However, raising one’s credit score after going bankrupt and filing for bankruptcy will take much longer. SuperMoney CEO Miron Lulic estimates that it would probably take somewhere around five to 10 years to bounce back from this major setback in one’s credit history.
So, how does one actually go about improving their credit score?
Where to Begin
No matter where you begin, there are many simple yet impactful things you can do now to jumpstart your journey to get excellent credit. First, check your credit reports and look for errors in the statements. Then, dispute all of the mistakes you can find.
Another way to start building good credit is to always play bills on time. This is because late payments can remain in your reports for as long as seven years. In relation to this, make sure to pay the balances in your credit card. Doing so, would decrease your credit utilization ratio and do your rating wonders.
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