A credit score of 720 is in the good to excellent range and lenders can approve this score easily. Standard bank credit score: While applying for loans and credit cards, any score of 720 and above will help one to get the best rate in the market. It means the higher you score the better the chances of getting approval for new credit or having better credit terms.
This is achievable if you currently have a credit score below 720, and then you want to make it above 720 in the next one and a half months or 6 months at most. Here is a realistic plan you can follow:
1. Review Your Credit Reports
The first step to start the process of fixing your credit is to request your credit reports from Equifax, Experian, and TransUnion. You can get your reports with annualcreditreport.com for free once a year. Look through the reports very carefully for anything that you do not recognize, for any accounts listed here that are not yours, for any balance or status that is not correct, etc. Challenge such entries in writing to the credit bureaus This can push your score high thus enhancing your performance in a short time.
Additionally, determine if any negative data is true, like payment history that shows the client had paid bills that were due or collection accounts. In the case of the identified items, come up with a plan of how to begin the process of making these items better. Some of the ways to manage credit card debt include reducing balances and ensuring that accounts are brought up to date.
2. Reduce Credit Card Debt
This percentage refers to the amount of credit used concerning the amount of credit available for your credit limits. This is your total credit card balance and the total credit limits you have been provided with a credit card. According to the specialists, this should be kept at or below 30%. Your creation is arrived at by summing all the figures in the card and placing the result against the total of all credit limits.
Ideally one should try to ensure that all the card balances are kept below 30% of the limit within 3 months. It insists on paying more than the minimum and avoiding the usage of these cards until the balances are reduced. Even better you should be able to get below 10% utilization and this will improve your score.
3. Become an Authorized User
So, if you have a friend, a family member, or a partner who has had a credit card for a long time, and has a low balance and on-time payments, ask them to share their credit card with you. This credit history will be reported to the credit reporting companies for the account holder and help to improve the score for the Authorized User if the primary account holder maintains good credit habits.
As long as the card issuer of the authorized user status reports the activity to the credit bureaus then it will be fine. Never just go for every account that is available out there, but rather ensure that you go for accounts that have perfect credit status.
4. A secured credit card is a type of credit card that is backed by a cash security deposit which is paid by the cardholder.
If you are initially creditless or have credit problems in your past, you’ll be able to ‘create’ new credit, thus improving your score rather quickly. A secured card is a less stringent credit product since it requires a cash deposit that is held by the issuer for the duration the card is active. All you need to do is open up the account with a refundable security deposit and your credit limit is set.
Charge reasonably for six months to keep the balance low on the secured card. Without fail, the client should pay the amount due to the supplier on time in full each month. This is responsible credit management which is going to be demonstrated in the following ways. This is because even if you pay your bills and other financial obligations on time, your score will improve in just 6 months.
5. Wait Before Applying for New Credit
You also know that each time you apply for a new credit, this is reported to the credit bureaus as a hard inquiry and your credit scores pull down for some time. It is important not to apply for loans, credit cards, financing, etc. while raising your credit score. Credit checks: Do not make any purchases that involve a credit check for at least half a year.
Ideally, it is best to have less than 2 in the last 12 months as hard inquiries can further negatively impact the credit score. When it comes to car and mortgage, they both count as multiple inquiries but if done within 30-45 days are considered the same.
Follow through this program for the next six months and your determination should pay off and help you achieve 720 or a very close credit score. The most important activities are decreasing credit card balances, paying credits timely, and allowing the current positive credit history to be active while the negative history is passive. Generally, do not rush and allow time to do its magic in your favor.
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