Brief History Of Credit Scores & Best Practices To Improve Them

Understanding Credit Scores 101

A credit score is an expression of credit worthiness of a potential borrower & is used by lenders to evaluate loan applications. In the United States, the FICO is one of the oldest & most widely used credit score. It is also used by online lenders on websites such as Instant Credit Loans US.FICO collates data from three other respected consumer credit reporting agencies – Experian, TransUnion & Equifax; to give you a three-digit score. The FICO score can range anywhere between 300 & 850. Any score above 650 is considered good. If you are looking to order a credit report, it makes sense to order a FICO as it used by most lenders. Of course, some other agencies which publish credit scores are VantageScore, CE Score etc. Your credit score is arrived at through a combination of factors such as payment history, total debt, duration of credit history, types of credit and credit enquiries made.

Hacks To Improve Your Credit Score

If you are going to be looking for credit on Instant Credit Loans or through any other source, it is prudent that you look at your scores & work on improving them. Here are a few quick steps you can take.

1) Check for Errors- Sometimes you will see that your FICO for TransUnion is different from that for Equifax. Chances are that, there are errors in your report. Dispute any incorrect information on repayment history and double check on debt burden.This is the easiest & quickest way to improve scores. You might see an improvement in your score as soon as the next month.

Brief History Of Credit Scores

2) Make Timely Payments- Your creditors provide your details only once a month, to reporting agencies. In case, your household bills are paid right before due date it might be captured as a pattern for late payments. Similarly, you might be defaulting on monthly debt payments by honestly forgetting about them. Auto-withdrawal mandates or monthly reminders will come to your rescue here.

3) Reduce Debt- This may seem obvious but is important. Before you make another large debt commitment, it is important that you work on setting aside money to pay current debt. Especially credit cards as 30% of your FICO score is determined by your credit card debt.

4) Maintain A Low Outstanding Debt- This applies to open loan accounts such as credit cards. It is important that you borrow a lower percentage from your total pool so that your debt percentage seems smaller & boosts your credit score. For example, if your credit limit is $100, borrow only what you need such as $10. Your outstanding amount would be calculated as 10%.

Simply using these plain hacks can help your nurture your credit scores & turn them in your favor so that it is easier to access credit from lenders on platforms such as this.

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