Everybody knows ways to improve a credit score, but nobody thinks how long it takes to get it on the track. Some suggestions may seem very easy and probably you will have implemented them. Did you find any difference? You will still be taking out bad credit loans and no credit check loans, which unfortunately contribute no role to improve your credit quality.
Any small loan that requires repayment in lump sum does not prove your creditworthiness. When you pay back a debt over a series of months and years, you are likely to have your credit rating well. A longer repayment period shows a lender that you fulfil your financial obligation successfully. However, not all small loans come with instalment feature and long term loans require you to have a good credit standing. So you are left with only one option - 12 month payday loans from direct lenders to build your credit.
It is not so easy to fix your score. How long it will take to move from bad to good credit depends on why it is so lousy and how low your score is.
Find out why your credit score is lowYour credit score is calculated based on information your credit file contains. There are five credit factors that determine your credit score: payment history, credit utilisation, credit age, different types of credit, and number of inquiries. Your score may be poor due to one or a combination of reasons. For instance, it may be lousy as you have missed repayments, you have maxed out your credit card, you may have applied for several loans within short time, and you have been relying on credit for a very long time.
Your lender informs credit reference agencies – in particular Experian, Equifax and TransUnion – of your payments. Every time when you take out a loan, a lender will always look at the report to evaluate how credible you are. This inquiry is known as hard inquiry and leaves footprints. Each hard inquiry pulls your score. Therefore, you should not apply for multiple loan applications within short period.
Further, credit score ranges of all credit reference agencies vary from each other. Whereas an excellent credit score for Experian is 881-960, Equifax considers 420-465 as excellent rating and TransUnion considers 604-627. Lenders do not disclose which bureau they consulted to check your credit report, and the variation in these ratings may affect your chances of getting the best deal. While a lender may allow you to borrow money at a lower interest rate with 430 score, the other may turn down your application. This all is because of different score ranges.
If you want to build your credit, you make sure that you pay all of your dues on time. Even one missed repayment can sabotage your score. If you have fallen behind repayment, your score will not immediately plummet. You will have a period of 30 days to clear your dues. If you fail to pay back within that period, the lender will inform credit bureaus of your default. However, you will have to pay late payment fees along with interest charges.
You should create a budget to evaluate your incomings and outgoings. Make sure that you are not spending money on nonessential items. If you are struggling to repay your debt, you should contact your lender to know alternatives to pay back money. Make sure that you pay all of your utility expenses on time and do not max out your credit card. If you use your credit card for any reason, settle your dues as soon as possible. The rule of thumb says that you should not use your credit card limit more than 30%.
If your credit score is low and you need money for an emergency, you should consider taking out instalment loans with soft credit check. These loans do not require a hard credit and therefore you will not lose your credit report. A lender will approve your loan application after considering your credit needs and repayment capacity. Since you will pay off the debt over an extended period, your credit score will go up.
If you continue to pay your debts on time, your credit score will rise, but there is no fixed time for getting a good credit score.
