3 mins read
12-Sept-2024
A credit score of 680 is generally considered good, but improving it further can give you access to better financial products, lower interest rates, and more favourable loan terms. Additionally, it’s crucial to maintain or boost your score to avoid slipping into the “Fair” range (600 to 649), where credit options become more limited and costly.
Another vital step is to pay your bills on time. This is one of the most important factors in calculating your credit score. Consistent, timely payments show lenders that you can manage your finances responsibly, and missing even a single payment can negatively affect your score.
It's also crucial to monitor your credit utilisation rate. This refers to the amount of available credit you’re using compared to your total credit limit. Credit utilisation accounts for about 30% of your overall credit score, so keeping your usage below 30% of your available credit can help improve your score over time.
Pay bills promptly: Timely payments reflect positively on your credit score. Ensuring all bills are paid by their due dates is a critical step in boosting your score.
Manage credit utilisation: Strive to keep your credit utilisation rate below 30% of your available credit. This shows that you are not overly dependent on credit, which is favourable to lenders.
Monitor your credit report: Regularly reviewing your credit report can help you spot errors or identify areas for improvement. This ensures that your score accurately reflects your financial activities.
Diversify your credit: Having different types of credit, such as loans and credit cards, can enhance your credit profile. A healthy mix of credit types demonstrates your ability to manage various kinds of debt.
Limited loan access: Lenders are less likely to approve loan applications from individuals with low credit scores, and if approved, the terms are usually less favourable, with higher interest rates.
Higher interest rates: Borrowers with lower credit scores often face significantly higher interest rates on loans and credit cards, which can make borrowing more expensive over time.
Difficulty obtaining credit: Many credit card providers and lenders may impose stricter conditions, such as security deposits or co-signers, to minimise their risk when working with individuals with low credit scores.
Larger security deposits: Low credit scores can also lead to higher security deposits for services like renting a home or setting up utilities, as providers seek to mitigate potential risks.
By actively managing your credit, making timely payments, and keeping an eye on your credit report, you can steadily improve your score and enjoy the benefits that come with a stronger credit profile.
How to improve your 680 credit score?
One effective way to improve your score is by taking out a credit-builder loan. By making regular payments on such a loan, you demonstrate to lenders that you are capable of managing debt responsibly, which can help boost your credit score. Some loans allow you to focus on paying the interest first, which can make monthly payments more manageable. Additionally, this can prevent your gold or other assets from sitting idle while contributing positively to your credit report.Another vital step is to pay your bills on time. This is one of the most important factors in calculating your credit score. Consistent, timely payments show lenders that you can manage your finances responsibly, and missing even a single payment can negatively affect your score.
It's also crucial to monitor your credit utilisation rate. This refers to the amount of available credit you’re using compared to your total credit limit. Credit utilisation accounts for about 30% of your overall credit score, so keeping your usage below 30% of your available credit can help improve your score over time.
Tips to get a higher credit score than 680
If you're aiming to raise your score above 680, here are a few actionable tips:Pay bills promptly: Timely payments reflect positively on your credit score. Ensuring all bills are paid by their due dates is a critical step in boosting your score.
Manage credit utilisation: Strive to keep your credit utilisation rate below 30% of your available credit. This shows that you are not overly dependent on credit, which is favourable to lenders.
Monitor your credit report: Regularly reviewing your credit report can help you spot errors or identify areas for improvement. This ensures that your score accurately reflects your financial activities.
Diversify your credit: Having different types of credit, such as loans and credit cards, can enhance your credit profile. A healthy mix of credit types demonstrates your ability to manage various kinds of debt.
Disadvantages of a low credit score
Having a low credit score can pose several challenges, including:Limited loan access: Lenders are less likely to approve loan applications from individuals with low credit scores, and if approved, the terms are usually less favourable, with higher interest rates.
Higher interest rates: Borrowers with lower credit scores often face significantly higher interest rates on loans and credit cards, which can make borrowing more expensive over time.
Difficulty obtaining credit: Many credit card providers and lenders may impose stricter conditions, such as security deposits or co-signers, to minimise their risk when working with individuals with low credit scores.
Larger security deposits: Low credit scores can also lead to higher security deposits for services like renting a home or setting up utilities, as providers seek to mitigate potential risks.
By actively managing your credit, making timely payments, and keeping an eye on your credit report, you can steadily improve your score and enjoy the benefits that come with a stronger credit profile.
