How To Recover From A Major Credit Drop
One of the worst things that can happen this year after COVID-19 is a credit drop. Most Americans don’t bat an eye when their credit score starts dropping. However, they face constant rejections when it’s time to request a loan. Lending institutes use borrowers’ credit scores to determine their probability of returning your loan on time. If you want to increase your credit score, here are our 4 tips that can help you improve your credit ratings.
How To Improve Your Credit Score
A good credit score is between 650 – 750, and 800 is considered exceptional. Any score below or close to 300 might get you in trouble. Here are 4 ways you can increase your credit score with our help.
1. Check Your Credit Report
If you have been paying your dues in time and your credit score seems lower than before, you need to check your credit report. Sometimes, there is an erroneous transaction that causes your credit score to drop. You can reach out to the top 3 credit bureaus (Equifax, Experian, and TransUnion) and your lending institution regarding this problem, and they will quickly resolve your matter.
2. Late Payments
If you fail to pay your dues on time, your credit score will start decreasing. This will become troublesome in the future, and you might have to pay a premium on insurance, and your other loans might not be accepted. To recover from late payments, you need to start paying on time. Moreover, you can return a hefty amount once or twice to shed some load off your shoulders and impress the credit bureau.
3. Obtaining New Credit
Sometimes, when you apply for a new loan alongside your current credit, you might notice a decrease in your credit score. This happens because the credit bureau is unsure if you have the money to pay back your new loan. However, this is a temporary decrease, and you can bring yourself up from this point by making all your payments on time.
4. Closing A Bank Account
One of the downsides of closing your bank account is that your credit score will drop. Don’t worry; this is also a minor drop, and your score will recover within 3 months. If it doesn’t, you should immediately reach out to the top three credit bureaus and have them correct your score.
Maintaining a high credit score is crucial to surviving in the USA. Living with a low credit score shows that you are not a reliable investment, and most of the luxuries you were once enjoying will become expensive. People with low credit scores have to pay high insurance premiums and more money on their loans. You might also face an excessive interest rate on your new loan if your credit score is low. Therefore, keep your credit score high at all times and make sure the number is between 650 and 750. Anything below this is considered risky by lending institutes, and you might run into financial trouble.