Even if your credit isn’t terrible, you might find it tough to secure a large line of credit. The key to increasing your available credit is building up your credit score.
The Disadvantages of Having Modest Credit Limits
Unless your credit is exceptional, you may have a tough time purchasing big-ticket items with your credit card. This can unduly delay the big purchases that add convenience and dignity to life. It can be disheartening to need a higher credit score than the one you currently have. Your score might be too low to acquire a needed apartment, automobile loan or home loan. If your credit card balance is negative, this can potentially force you to stay behind while peers take fun trips. You probably won’t be able to transform your credit score overnight. Nevertheless, you can take steps now that will gradually improve your score. If you give it time, you’ll be able to build a near-perfect credit score.
Navigating the Credit Bureaus
Three credit bureaus gather information from creditors and determine your personal credit score. Established back in 1899, Equifax is the oldest and most prestigious credit bureau. The other two bureaus are called Experian and TransUnion. Collectively, these three organizations have more influence over American lives than many government offices. Typically, your lenders report to these bureaus every four to six weeks. Depending on what your creditors report, your credit score will go up, fall or remain unchanged.
The Factors That Go Into Your Personal Credit Score
The credit bureaus won’t reveal the exact reasoning determining your credit score. However, we do generally know how scores get assigned. Your payment history is the most important determining factor. If you pay your bills on time every month, your payment history will be an asset to your score. Amounts owed are a factor that determines nearly a third of your score. The length of your credit history (LOC) determines 15 percent of your credit score. Your LOC is affected by the average age of your open credit accounts. The longer you’ve actually used available credit; the more favorable your LOC will be.
One’s credit score will also trend higher if one maintains a good credit mix. This means you’ll want to use an even mix of revolving credit and installment credit.
Improving Your Credit Score By Reversing Identity Theft
As one might expect, improving these indicators can be a long, involved process. However, there is one potential way you can improve your credit score in the short term. If you’ve been a victim of identity theft, the thief might have opened fraudulent credit accounts in your name. When you contest a fraudulent account, you may see that account removed from your account fairly rapidly. You could see your credit score improve within weeks or even days. According to the finance experts at SoFi, “it’s always wise to keep tabs on your credit card activity.” Identity thieves can seriously impact your quality of life.
Increasing your credit can be a lengthy process. However, paying your bills on time and monitoring your credit report can help you access the credit amounts you need.