A bad credit score can impact a lot of things. It might hamper your efforts to get a loan you need, it might make you ineligible for credit cards, it might also deter away investors if you are planning to start a new business. Long story short, a bad credit score means that you are financially non-trustworthy and any person or financial institution would think twice before letting you use any of their money. A bad credit score might stem from a lot of reasons, some out of your control but the good news is you can improve it. Here are 5 tips to improve your credit score but do make note that improving your credit score is a gradual process so it might takes months and years for these tips to weave their magic.
1) First Make Sure You Have The Correct Credit Score:
At any point of time there are multiple companies offering you detailed credit report. Many times there are differences between these reports. Ask for and compare reports from at least 3 different sources. That way you would be able to understand exactly in which areas your credit score needs improvement.
2) Reduce Number Of Credit Cards You Use:
If you use too many credit cards, that is counted as a credit seeking behaviour and often denounced by financial institutions. In fact many people tend to keep transferring credit card payables among different cards just paying the transfer fees and never actually pay the debt amount. Hence any time you are spotted with too many credit cards your score can be trouble. Just keep the credit cards you need and cancel the rest.
3) Keep A Watch On Credit Card Balance:
If you are using more than 30 or 35% of your credit limit each month, your credit score could take a nosedive. Always try to credit card payables within 30% of total credit limit. Also make it a point to pay the bill in full instead of the minimum due to boost your score in the long run.
4) Not Too Many Loans At Once:
Sometimes we need loans and we cannot help it. But too many loans running at once is frowned upon by financial institutions as loan seeking behaviour. Whenever possible, try to close one loan successfully before applying for another.
5) It’s Not Too Late To Pay Up:
If you have defaulted on your loan or bill payments in the past, it will surely take your credit score down. But it is not an indelible mark on your score and can be improved. If you keep paying bills and loan instalments in time, your score will definitely get better.
6) Set Up Payment Reminders:
Believe it or not, the number 1 reason behind not paying bills on time is forgetfulness. To avoid this, set up payment reminders on your phone or laptop for dates when you need to make the payments. Timely payments will improve your credit score and save a bunch of late fees.