Having a poor credit score could affect your life in innumerable ways. Negotiating a loan from various lenders will become much harder. Furthermore, even if a loan request or any other credit transaction is accepted, you still have to contend with high interest rates. If you aren’t careful, these high interest rates could wreak greater damage on your finances, and worsen your credit rating. Finding ways to improve your credit rating will therefore go a long way to ensure you have a stable financial base, and save you a lot of money down the road. If you find that your credit score is lacking, here are some tips to remedy the situation.
Keep old debt on your credit report.
Some people believe that any kind of debt in their credit report is detrimental to their score. They will therefore strive to remove any traces of debt whenever they pay off their house or loan. This is an erroneous assumption that negatively affects the credit score of many. While negative entries in your credit report are bad for your rating, they will eventually vanish after some years. On the other hand, debts that you have paid back promptly will do wonders for your credit score. Endeavour to leave them in your credit score for as long as possible. A long credit history that shows you pay back your debts will reassure your future lenders.
Pay all bills on time.
Making prompt payments is an absolute necessity when rebuilding your credit score. Defaulting or making late payments on anything from mortgage to electric bills is unwise. It will stay on your credit report for years and greatly impact your credit score. Even when saving for a major purchase like a house, never neglect your monthly bills. A good idea is to set up a direct debit scheme to reflexively pay the minimum requirement monthly. This is to ensure you don’t forget any payment. You can then top up the amount on your own.
Check your credit report.
Regularly scrutinize your credit report when you are about to request for a loan. Check for any mistakes or discrepancies. You could also be a victim of fraud and have your credit card accessed by unauthorized persons. For any mistakes, challenge them by complaining to the credit reference agency for resolution. Alternatively, contact the lenders responsible for the incorrect entry and rectify the issue. Remember to correct any information that may have been true at some point but is now irrelevant. For instance, if you got a job and you were once unemployed, ensure your credit rating reflects this.
Use a credit-builder card.
Apply for credit-builder cards if you have bad credit. They are generally more expensive than standard credit cards since they consider those with bad credit. However, credit-builder credit cards are a good choice because they offer a way of strengthening your credit score over time. If your credit score is low enough, they may be the only option left as standard credit card companies may decline your request. Remember to make prompt monthly payments to reduce the interest payable and have a positive impact on your credit rating. Failing to do so will put you into greater monetary problems.