As everyone is aware, a credit score is a statistical number that represents how you have used your credit over a specific period of time. It is important to be consistent in your credit repayments to have a good credit score. A high credit score increases the probability of getting a loan easily as it indicates to the lenders that the probability of you repaying the loan is higher.
And here, we shall discuss some ways of how you can increase your credit score.
CLEAN UP YOUR CREDIT REPORT: You should apply for a credit report to check your score regularly. Many times there are errors in the report, which will lead to an inaccurate score. Removal of mistakes will improve the credit scores.
BUILD A STRONG CREDIT AGE: If you have a short credit history, there’s not much you can do quickly here to improve your credit. You could try to piggyback on a friend or a family member’s credit card if they have a long history of on-time payments. Have them add you as an authorized user, however, you may struggle to find someone willing to do so since they would be responsible for any charges you make. Your other options: Wait it out and don’t close any accounts.
AUTOMATE YOUR PAYMENTS: We have a busy life and we might miss paying credit card bills or mobile phone bills. There are many software tools and mobile apps available as well as to keep track of payments or you can use good old calendar reminders.
LIMIT APPLICATIONS: The 10% discount for signing up for a credit card may seem worth it at the moment, but your credit score will take a hit for applying, whether you get approved or not. A hard inquiry will impact your credit score for a full year, though your score will start improving almost immediately after you apply. The hit is small but if you’re on the edge of two credit score tiers or applying for lots of credit offers in a short time span, you can do a lot of damage.
OLD LOANS SHOULD BE SEEN IN THE CREDIT REPORT: Do you remove the names of companies that you had worked with when you join a new company from your resume? You don’t as they offer an insight into your experience and expertise. Similarly, a longer history of good repayment practices will help increase your credit score. In case you are planning to prepay some loan- go for the newer one.
BE FASTIDUOS: Do not agree to be the guarantor for anybody’s loan. If that person defaults on the loan, your credit score will be affected negatively. Conduct due diligence on the borrower and guarantee loans selectively.
Improving your credit score might take up some time, but once it’s done, it will all be worth it. Constantly worrying about being approved for loans, mortgages and new credit cards is not something you want to be doing for the rest of your life. Following the above steps will not only help save you your money but will also teach valuable skills necessary to maintain a good credit score.
