When it comes to being approved for a loan at a low interest rate, your credit score matters. If it is not as high as it should be, it is time to step on your plate and take action to increase it. A higher score will not only help improve your chances of getting a loan approved, but it will also enable you to get lower interest rates, which will make your loans cheaper.
Improve Credit Score: How Long Does It Take?
How quickly you can increase your credit score depends on why it is the current number. For example, if you are just starting to build up credit after you have none at all, you can increase your credit score relatively quickly by simply using credit and on-time payments and in full each month. If you add more credit cards and don’t use them – or make only small charges on them – your total debt will decrease relative to the amount of credit available, increasing your credit score.
Even if you currently have a lot of debt on your books, you can increase your credit score more quickly if you repay that debt because your debt-to-credit ratio improves.
However, if your score is low due to a history of missed payments, bankruptcies, or other financial missteps, it takes longer to improve your credit score. In this case, it can take many months and sometimes even years, depending on how badly you have damaged your score.
How To Push A Credit Score in Thirty Days
Although it usually takes a few months to make a significant difference in your credit score, there are things you can do now that can help you increase your score in a few weeks. Here are some suggestions that can help give your credit score a quick boost:
Troubleshooting Your Credit Report – Perhaps the quickest way to improve your credit score is to spot and correct errors in your credit report. You have the right to pull your credit report free of charge from credit reporting agencies like Equifax or TransUnion and go through it to see if any errors could drag your score down.
Increase Your Available Credit – If you require a higher credit score from an established creditor, it can not only increase your available credit line but also increase your credit score.
Negotiate With Creditors – You may be able to ask creditors to accept partial payments for debts that are currently in debt collection in return for reporting the debt as “paid.”
Become An Authorized User in Someone Else’s Account – If you have family members with good credit, adding you as an Authorized User to their account can help increase your credit score. Any of their timely payments will boost your record.
How To Enhance Your Credit Score By Two Hundred Points
A few points on your credit score can make the difference between approving a loan at a reasonable interest rate and rejecting a loan altogether. If your credit score is currently below 600 marks, it’s time to take a few steps to give it a boost. Here are some ways you can effectively increase your credit score by 200 points:
Do Not Use More Than 30% of Your Credit Card Limit – Just because your credit card company allows you to spend a certain amount of money on your credit card does not mean that you should withdraw your credit card maximum each month. To increase your credit card total, keep your credit card spending to no more than 30% of your credit card limit. This will increase your score because you pay your card on time each month.
Settle Legacy Debts – Creditors are sometimes willing to negotiate with borrowers to eliminate certain negative points from their credit to receive payment. You may be able to do this with your creditors; it does not hurt to ask. Settling your legacy debts can do wonders for your credit score and will even help you avoid problems in the future.
Make All Payments in Full – All secured credit cards or credit lines should be fully repaid if possible, which will help you boost your credit score.
Canadian Credit Score Ranges
In Canada, credit scores are somewhere between 300 and 900 points, which is the highest credit score available. Nevertheless, anything above 650 should qualify borrowers for typical loans, while anything below that level is likely to make it more difficult to get approved for a loan.
How To Boost Your Credit Score To 800 Points
Generally, lenders want a credit score of at least 650 before they qualify a borrower for a loan. However, borrowers with a score of 650 may not be able to afford the best interest rates, which makes their loans more expensive to repay.
When it comes to getting approved for loans and securing the lowest possible interest rate, a higher credit score is best. If you get your credit score to 800, you will probably be able to take advantage of the best interest rates and should have no problem getting approved for a loan as long as all your finances are in order and there are no other red flags to worry your lender.
In addition to the tactics mentioned above, you should consider the following measures to bring your score to 800:
- Call your creditor and ask them to boost your credit limits.
- Pay off credit cards that are currently at or near their limit.
- The debts with higher interest rates are repaid first.
- Consolidate your debt to pay it off faster and transfer the balance of a higher interest rate card to a lower-interest card.
Have a mix of debts that can increase your credit score.
Depending on your specific situation, it may only be a matter of a few months before you get your credit score back on track. Regardless of where you fall into this spectrum, it is important to take steps now to improve your credit score so that you can enjoy better interest rates and an easier time for approving a loan.