It will take many years before you can raise enough money to buy a house, a new car, or to finance a business. You can’t wait for a decade or two to have these things. You need them now—and applying for a loan is a good way to do that. With a loan, you’ll have a house, a car, or money for a business without having the money now. However, the success of your loan application will depend on your credit history. The higher your credit score, the more possible you’ll qualify for the loan. But what if you are 200 points short of the ideal credit score?
Fortunately, you don’t have to give up in applying for a loan when the lender says you are disqualified. You can raise your credit score 200 points and get approved.
First of all, you have to understand what are the factors affecting your credit scores. Then, you should try to fix these factors and see your credit score increasing. These are your payment history, debt ratio, credit history, new credit, and types of credit. Keeping these in mind, here are some tips that will help you raise your credit score to about 200 points:
- Make on-time payments. Your payment history comprises 35% of your credit score. Some say it won’t help if you start paying on time. But the truth is, if you start paying on time today, you can dramatically improve your credit score.
- Increase credit limit. Accountants calculate your debt ratio as 35% of the money you can spend. For instance, if you have $50,000 credit limit today, then your debt ratio is $17,500. When your lender increases that to $100,000, then you’ll have $35,000 debt ratio. The higher the amount of debt ratio, the higher will be your credit score.
- Don’t close credit cards. Most people will resort to closing their credit card account when they are not using it. This is a bad move because without a credit account, the creditor will have no way to assess how you pay bills. Keep your account open. Since you are not using it, you’re not adding to your debts. You can also keep it clean, which would dramatically increase your credit score.
- Don’t get additional loan. Creditors will see how many loan accounts you opened within the six-month period. Some creditors make their decision solely on this factor. If you have many loans that means you are driving yourself to more debt. That also means you’ll have lesser chance of prioritizing the creditor.
- Fix credit report. Check your credit history and see if there is any discrepancy. Sometimes, credit agencies overlook some details. It’s not their obligation to correct these mistakes, it’s yours. As early as you have fixed your credit history, the lesser your problems will be in your future loan application.
These tips on how to raise a credit score to about 200 points are surely helpful. But still, nothing beats getting help from a qualified professional. They know more ways on how to help you increase your credit score. Doing your homework is still recommended. You don’t just let the professional do his work. You need to know if he surely is doing fine to help you.