Helpful Tips to Improve Your Credit Score

A three-digit number is what dictates whether you get a loan or not. Your credit score is what helps lenders decide on the likelihood of how you can pay your debt on time and how you deal with financial obligations in general. Needless to say, your credit score is one of the important factors that affect loan applications.

Having a bad credit score doesn’t necessarily mean that you cannot apply for loans. However, some lenders and banks offer higher interest rates for bad credit loans. Some of these loans are also secured, meaning you have to hand over collateral in case you can’t make regular payments.

If you don’t know the current category of your credit score, it might be wise to check on the Credit Score Trends. After having reviewed your credit score and it falls on the lower categories, here are helpful tips on how to improve it.

Pay your bills on time.

When you apply for a loan, your lender will always check on how reliable you are on paying your debt on time. They review your credit report by asking for your credit score. This is because the determinant on how you can reliably pay your debt falls on your past payment performance.

You can improve the factor that affects your credit score by paying your bills on time. Such bills include credit card bills, debts from loans, utilities, rent, phone bills and other household invoices. Paying late or paying less than what you owe negatively affects your credit performance.

Report discrepancies on your credit reports.

Incorrect information in your credit history can significantly affect your credit score. What you may want to do is visit credit reporting bureaus and check your credit card reports for potential errors. If there are inaccuracies present in your files, you can report such inaccurate information to dispute it and have it corrected to improve your credit score.

Take advantage of score-boosting programs.

If you have a thin credit profile, you may want to engage yourself in score-boosting programs. Such programs work by having you give a company permission to access your online banking accounts. The company then checks your phone payments, utility, and cable TV bills for the past two years.

It only takes about five minutes before the entire process finishes. Your credit score that is updated is then delivered to your potential lender right away.

Make payments on your debt.

Another factor that affects your credit score is the credit utilization ratio. The sum of all the balances of your credit card at any given time is divided by the limit of your total credit. For you to figure the average ratio of your credit utilization, you might want to check on your credit card statements in the 52 weeks. Do the math, and you can get how much credit you use on average each month.

The lesser your credit utilization ratio is, the more your lenders see that you can manage your credit well. Keeping your balances low in your credit card and paying off your debt regularly will positively influence your credit score.

Monitor your credit.

The best way to motivate yourself to improve your credit score is by checking it every few months. This will help you manage your credit well, as you can see the fluctuations of your credit score. In this way, you can also discipline yourself by avoiding more credit.

Don’t open unnecessary accounts.

Acquiring more credit will always lead to more debt. The more you have debt, the lower your credit score will appear. If you think that opening accounts will create a better credit mix, then you are wrong, as it probably won’t have a positive effect on your score.

When you open accounts, your potential lender will ask for your credit score from bureaus. This creates hard inquiries that will adversely affect your credit history. One disadvantage of opening unnecessary accounts is being tempted to do overspending, which accumulates more debt.

Time your applications.

Denied applications have a negative influence on your credit score. That said, you may want to avoid going apply for credit at the wrong time. Before you jump on applying for a loan, you may want to research how likely you are of being approved for credit.

It is also bad for your score if, in just a short time frame, you make multiple applications for credit cards. Various applications result in numerous hard inquiries, so you might want to give a more significant time gap between applying for credit cards.

Takeaway

It is still not too late for your credit score to improve. Be patient. Your credit score does not develop overnight. If you follow the steps mentioned, you can improve your score and grab the loan or credit that fits your financial needs.