If you have a credit score of 500, it can be difficult to get approved for loans and credit cards. However, with the right strategies, you can rebuild your credit and reach an 800 credit score. Here are some tips to help you get started.Pay Your Bills on Time. Payment history is the most important factor in calculating your credit score, accounting for 35% of your FICO score.
To avoid late payments, use a spreadsheet to keep track of due dates or sign up for automatic payments.
Maintain a Low Credit Utilization Rate. The length of your credit history represents 15% of your credit score, so having a negative credit history can prevent you from reaching a high score. To build your credit, apply for a credit-building loan or your first credit card.
Apply for a Secured Credit Card. If you don't meet the requirements for a traditional credit card or don't want to use one, you can apply for a secured credit card instead. This is a low-risk option for lenders, and they can afford to give a small line of credit to people with little or no credit. Review Your Credit Reports.
Since your credit score is based on information in your credit reports, make sure they don't contain any inaccurate negative information such as late payments or collection accounts.
Keep Your Credit Utilization Low. Your utilization percentage is calculated for each credit card individually and collectively for all your accounts. To keep your score in the highest possible range, use less than 10% of your total credit limit and not more than 10% of any individual account.
Ask Your Issuing Bank to Convert Your Account. When your credit score is higher and you have good credit card habits, ask the issuing bank to convert your account into an unsecured card. By following these tips, you can rebuild your credit and reach an 800 credit score. With this excellent or exceptional rating, you'll have access to the best loan terms and best credit cards.
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