You’re living your best life being fuck-boy free and drinking your alkaline water, when suddenly IT happens - you need to purchase a new car, you need to move into your first apartment, you need to get that new store card (okay ... you probably don’t need the new store card, but it can’t hurt right?). That’s when you realize that your credit sucks, and you’re on a mission to improve it. Never fear - Ajaye is here.
Some of the things adversely affecting your credit and holding you back from a low interest rate, low security deposit, or that $5,000 credit limit are some of the easiest things to fix.
1) Hard Inquiries - when a potential lender reviews your overall credit to determine your creditworthiness, they run your credit report. If your credit report is favorable, you’ll be approved - and if it isn’t, you’ll be denied. Hard inquires remain on your report for at least 2 years before they’re eligible to fall off. The more inquires you obtain, the less desirable you appear to lenders. In short - stop applying for everything that you may get offers for!
2) Payment History - paying your bills on time AND paying them in full when they are due shows lenders that you are responsible, and that they should continue to increase your credit limit(s). Your credit score is adversely affected when you 1) make late payments, 2) miss payments and/or 3) only pay the minimum amount due. In short - don’t charge your card for amounts that you don’t or won’t have to pay back.
3) Credit Mix - the different types of accounts that a consumer has (i.e. - student loans, auto loans, credit cards, mortgages, etc) contribute to your overall credit score/credit report. As you build/rebuild your credit, it is good to have a healthy mix of different lines of credit. Fun fact: student loans, auto loans, and home loans are all consider good debt as long as the borrower maintains their payments without becoming delinquent.
These are just a few of the factors that go into obtaining and maintaining good credit, as well as being considered as a desirable candidate to lenders. With patience and persistence, you’ll get that 800 credit score in no time!