One of the ways to obtain loans, financing and credits in stores is through a consultation to the credit protection registries, checking the default rate and other consumer information. Therefore, if you are looking for one of these alternatives, it is essential to know how to improve your credit score.
It is worth saying that a good score may be directly responsible for a loan with a higher value or for the chance of getting better payment terms. This score is nothing more than a way for institutions to check their ability to pay before releasing credit.
Are you interested in the subject? So, continue reading this article and learn how to improve your credit score!
After all, what is credit score?
The credit score is a scoring system that demonstrates the probability that a consumer will be in default, considering a period of 12 months. The points are based on public information, which has been made available to the database of companies offering credit analysis services.
Because of this, whenever there is a request for a loan, financing, credit and even a credit card, the company analyzes this data to verify whether the granting of credit is viable, in addition to defining the amount that will be made available to the interested party.
The score ranges from 0 to 1,000 and can be divided into three groups:
- high default risk: 0 to 300 points;
- medium default risk: 301 to 700 points;
- low default risk: 701 to 1,000 points.
This score takes into account numerous factors, such as the timely payment of bills, the financial relationship with companies, the existence of negative results and the updating of registration data.
How important is it to keep your credit score high?
Keeping the credit score at a high level is important so that you can easily acquire credits, demonstrating to companies that it is safe to make the transaction.
The interpretation of these data tells us that the lower the score, the greater the likelihood that the company will encounter default, presenting losses with the business. We must not forget that interest rates and limits can also be influenced by punctuation.
Therefore, maintaining a high score is synonymous with better credit conditions and easier to close a deal. In other words, maintaining a high score is the same as staying closer to your goals. Think about it!
Before you learn how to improve your credit score, you need to know what your score is, don’t you? From this, it will be possible to understand what your mistakes are and, thus, create ways to improve your expenses.
How to find the score?
There are some sites that allow consumers to access their credit score, such as Serasa Score and Boa Vista SCPC. On both sites, it is necessary to register and, based on your information (such as paying bills on time, history of negative debts and the frequency of searching for credit), your score is calculated.
As noted, there are numerous factors that can interfere with your final score. The social score, which is the use of information made available on social networks, is an excellent example.
The social score is a metric used by companies to improve their methodologies, in terms of credit scores. This information is obtained through the personal data that are spread on the internet and that can become useful information.
However, it is necessary to remember that there is a lot of informal work in the country, that is, there are several people who are making money, but without registration in any official government database. In addition, tax evasion also complicates the process, as it is also a case of hiding information.
Thus, some companies are looking for innovative alternatives to overcome these problems. Searching for information on social networks, for example, is an excellent alternative. Information not found in the data can be identified on Instagram or Facebook.
This is called the social score, which is not at all easy to be determined and, mainly, used. However, this type of data is already something that companies are striving to improve the way of searching, analyzing and classifying information.
So, how to improve your credit score?
Surely, you must be thinking, “What should I do to improve my credit score?” It must be remembered that the score is constantly updated, as new data is added to the system.
However, there are some practices that can help you improve your credit score. Look!
Clear your name
Having a negative name, regardless of the credit score, is a synonym for difficulties in obtaining credit. Even after your name is “cleared”, the data maintains its impact for some time.
So, avoid getting your name dirty as much as possible. If the situation has gotten out of hand, try to negotiate debts and find better ways to remedy the debt by clearing your name completely.
Pay bills in advance
The settlement of accounts before maturity shows that you have good financial planning and an efficient control of your budget. Because of this, paying off debts in advance can be a great differential for increasing the score.
On the other hand, delays will be responsible for reducing the score, as they are understood as credit risk.
Keep data up to date
Keeping your data up to date is another factor that directly influences the score. This happens because of the existing reliability in your registration, that is, the accuracy of the registered information.
So, it is essential to check if the data is correct, mainly in the companies that work with the score.
Make the registration positive
Making a positive registration is an excellent way to improve your credit score. By doing this, you authorize information such as the purchase price, the number of installments, the due dates and payment dates to be recorded and provided by the companies.
In this way, by paying the bills on time, you will allow this data to be taken into account when calculating your score, helping to increase your score and, consequently, helping to achieve your goals.
Learning how to improve your credit score and understanding how to use this metric in the market is not a simple task. Throughout this article, we seek to list the main information on the subject, giving you what you need to do to improve your status.
So, did you like our article? What did you think of the information we have listed on how to improve your credit score? Are you interested in the subject? So, learn about 5 tips on how to deal with bad debt. Don’t miss this content!