If you are planning to take a loan some day, the number one thing that will matter for you is your credit score. Maybe it's not bad, but it can be better. It is time to look into the positives of having an excellent credit score first and see how a not so bad credit score can actually put you through quite a lot of loss at the end of the day. Remember, it is never really about getting the loan, because you will get it either way, it is mostly about what interest you will repay and the simple logic of - better the credit score, the more favourable the payoff interest is going to be for you.
Let us now start looking into how you can improve your credit score, and those of you who have a poor credit report can really build on from here, with the following below mentioned tips.
Get your credit report - This is the basic step, you have got to know your credit report, after all unless you know the details yourself, how would you know where to improve on?
Request a copy of your credit report and go through it deeply. It is common to have errors in your credit report, perhaps a late payment that was actually paid on time, or a due that you have already covered. Look for those mistakes and get it corrected. Fixing faults is the best way to quickly improve your credit score.
Also, this lays for the ground work, as there are certain dues on your name that has to be paid. This report will basically give you a good idea about where you should begin your work.
Payments on time - From now on, make this an absolute rule of paying all debts on time. Never miss a payment, mark it on your calendar or set up an alert, but whatever you do, never miss a deadline.
You might think that missing a deadline for payment is no big deal, a bit of late fines and that is all. Unfortunately that is never the case. This little bit of your laziness lasts for years on your records, and it will heavily effect your overall credit score. This delay in payment shows how careless you are, something most lenders will worry about before give you that excellent loan.
Pay off your debts - sometimes, we just end up taking too many loans. The problem with this is, all of this stuff shows up on our credit card and start to kill our credit score. If you have funds available to you, try to pay off these loans as much as possible. Even if you can’t finish it all, you might be able to lower it. And then, if you have any friends or family members supporting you, take their help and get some money and use it to pay off your credit card loans.
Keep at it - for those that think having too many credit cards is a bad thing and start to actively close down older cards, must read closely here. Old cards are good; just don’t let them get inactive. Do some small purchases on them from time to time and keep them active. It is good to have an age old credit history, so hold on to your older cards and it will boost your credit score.
Use your credit cards but don’t overuse the limit - Your credit cards have a credit limit. Try to keep the expenses on the lower side, if that means you need an extra card, so be it. But don’t get too close to that credit limit.
Live in the present - You do not need to worry about your mistakes that you did ages back. Old credit history fades out and has very little effect on your credit score. Make sure to keep a good track of your current dues and pay them in time. What you do now matters more than what you did in the past.
Get a credit card - Many people believe that having a credit card is bad, but when it comes to building your credit history, improving your credit score etc. having a credit card is the most important thing. So get one, but don’t apply for too many in a short period of time.
If you are planning to take a loan in the near future, your credit score will matter. Make sure to build a strong credit score so that you can get loans easily and at a better interest.