- A credit score plays an integral role in the lives of insurance carriers. For such an individual, the purpose of this score is to determine the level of risk of insured people. The higher the credit score, the better the chances of landing a better insurance.
Unfortunately, not everyone is able to obtain a good credit score. Thus, if you wish to know how to increase credit score, follow these tips on enhancing claim activity.
Assessment is Key
The first step to increasing credit score begins with assessing credit reports from each of the three credit reporting agencies: Equifax, TransUnion and Experian. You can easily obtain these files once each year from annualcreditreport.com. Next, review the files and take note of the errors that are contributing to a lower credit score.
Bills x Time
Once you have determined the negative factors in the report, you can start working on them. One of the most common problems faced by users is bill payment. If you wish to increase your credit score, pay off all your bills on time. In case you have trouble paying on time, set up an automated system with the bank’s bill service or sign up for notifications from your credit card company.
Debt must not be Named
If you’re still wondering how to increase credit score, try starting off by paying your past dues. When you pay off a collection, your credit score is bound to increase. However, do remember that the record of a debt being part of your collection will stay on the record for seven years.
Catch Up on all Due Bills
If you have been in the habit of missing payments, you might want to get caught up with all past due bills. This is primarily because a missed payment can lower your credit score by nearly 100 points. However, similar to paying off debt, the paid dues will also reflect in your credit report for quite a while.
Slow and Steady wins the Credit Score
Simply put, maintain a balance below 10% on your credit cards for a higher score. If your balance surpasses the limit, it will adversely impact your overall credit score.
A Payoff > A Transfer
A balance transfer at a much lower interest rate may seem appealing but may end up costing you more if not followed through properly. Try to ensure a proper process; pay off the balance before adding to the debt load.
Paid Off Accounts are NOT to be Closed
If you choose to close off unused credit card accounts, the credit available will be reduced. Moreover, your credit score will also be impacted adversely. Thus, keep these accounts open as it shows you have the ability to manage credit effectively.
A Myriad of Credit Types
According to the requirements of FICO, consumers with both credit cards and installment loans are preferred. Hence, if you are paying off a student loan or have a car loan, then multiple credit cards will aid in making the cut. This doesn’t mean that you are required to keep numerous cards all at once, as that would be considered a negative factor. All you need to do is keep a card that shows how you are able to manage credit effectively.
So, What Will It Take?
Since claim activity has shown to improve credit score, you can undertake the aforementioned steps to boost up your score. These steps may seem complex and overwhelming at first, but are actually quite easy and straightforward in reality. In fact, if these points are well implemented, you may even notice a change in credit score in just 45 days.
