By considering a loan consolidation, borrowers not only save or reduce your long term debt but can also help Increase Your Credit Score for the better over time. It is worth noting that an improved credit score is a very important factor when you enter the “real” world and want a new car, apartment, credit card or buy a house.
Here are some tips for you to help you improve credit score.
• If you have more open accounts, you will have lower credit score. Over the student borrower’s life, you may have borrowed up to eight separate loans to pay for your college. Each of these loans has a different payback amount, payment terms and interest rate. The more accounts the student has opened, the lower the over credit score. Therefore, lowering the amount of open credit lines on a credit report is needed, but this can only be made possible through a student loan consolidation in which the older accounts will be combined into a single account.
• The lower the payments you have, the higher credit score you will get. When the credit report evaluation comes, it is usual in the process that the amount of the borrower’s monthly minimum payments is taken into account. So, when you hold a number of loans, every payment is considered part of the borrower’s monthly payment obligation. Those who have considered consolidation have only one payment to make, which is typically lower than the minimum amount of the separate, multiple loans.
• The debt to credit ratio matters. As you may know, the credit bureaus typically find out if you are in debt. They do this by way of evaluating the amount of your available credit you actually use. In case you have a total of $10,000 available on three credit lines and you owe $2,000, your score will then be considered higher than especially if you have maxed out your on credit line with a $2,000 limit. It is worthy to note that if a person has several loans with a maximum used, it will reflect negatively on his or her credit score. Given this fact, consolidating your accounts is very important in order to lessen the number of open accounts being used and improve your credit score.
• Use your cards lightly. Having big balances can hurt your scores, regardless of whether you pay your bills in full each month. What’s typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements.
It is recommended that you often can Increase Your Credit Score by limiting your charges to 30% or less of a card’s limit; 10% is even better. If you’re having trouble keeping track, you can set up e-mail alerts with your credit card companies to let you know when you’re approaching a limit you’ve set. If you regularly use more than half your limit on a card, consider using other cards to ease the load or try making a payment before the statement closing date to reduce the balance that’s reported to the bureaus. Just make sure to make a second payment between the closing date and the due date, so you don’t get reported as late.