Your credit rating can affect many things like your ability to borrow money through credit cards, mortgages, and loans. A credit rating is what lenders use to decide whether they should lend you any money. They also use this rating to determine how much they should give you and how much interest they should charge you. Here are some of the things that influence your credit rating and ways to improve your credit rating.
- High levels of debt
- Missed or late payments on things like mortgage, personal loans or electricity bills
- Unused credit cards accounts
- Mistakes on credit card reports
- Failure to appear on an electoral register
- Moving house too often
- Having a joint credit for mortgage or bank account with someone who has a poor credit score
All these things can affect your score negatively. Bringing it back up will not be easy. When it comes to rebuilding or repairing your credit score, you can do a few things including getting credit counsellors, accountants or financial planners to help you out. You will need to be more responsible in order for your credit score to improve. Listed below are 10 easy ways to improve your credit rating and score.
- Pay Your Bills on Time
This seems like an obvious point but unfortunately, too many people take this for granted. Late payments are some of the negative reports on credit scores. They are also responsible for a significant drop in the rating. The best thing to do is make timely payments every month without any exceptions. If you run into financial problems make sure you pay at least the minimum monthly payments and this way the creditors will be more understanding.
- Watch Your Credit Card Balances
The amount of revolving credit versus the amount you are actually using can have a major impact on your score. You need to pay any balances you have and keep them as low as possible because the smaller the percentage you have the better your credit score rating will be. If you have more than one credit card with small balances on each, you will also need to eliminate all those balances.
- Leave Your Old Debts on Your Report
More specifically, leave good debts on that report. Despite the fact that most debts disappear after seven years, debt that you handled well in the past will be very good for your score. Let your good reports stay on your record as long as possible.
- Apply For Credit Only When You Absolutely Need It
Only apply for credit if it is necessary the make sure you get the best rates possible on the loans and credit cards. If you already have a credit card, do not apply for a new one that you will rarely use. In addition to that, do not apply for multiple new credit cards within a few months because it will affect your score negatively.
- Separate Your Accounts
It is common for couples to obtain joint accounts and co-sign loans, which make many things easy for them. However, if or when they divorce, credit score and ratings become a challenge. If you are getting divorced, pay off and close the joint accounts. Do not apply for multiple credit cards, mortgage or loans immediately after. Separate each by at least six months.
- Avoid Excess Inquiries
Each time you apply for a loan, potential creditors make inquiries on the credit reporting agencies and these inquiries will remain listed for a while. This information is added to your report and many inquiries within a short time will lead to a reduction in your credit score.
- Correct All Inaccuracies in Your Report
This is a fast way to boost your credit and if you review and correct all erroneous and out-dated information, it will improve your score.
- Avoid Bankruptcy If You Can
Many people have mixed feelings when it comes to the issue of filing for bankruptcy. Remember, that is the worst thing you can do for your credit score. If the late or missed payments and defaults did not do it then bankruptcy will plummet your score. This will stay on your report for ten years. Consequently, trying to obtain any type of loan will be very difficult.
- Do Not Consolidate Balances on One Credit Card
Unless there is a chance you can save a lot in interest charges, avoid this as much as possible. If you max out on your credit card, it will detract from your credit score even with timely payments.
- Negotiate With Creditors
Creditors do not have to be your enemies, they are simply in business and need to do their job and profit from it. When you fail to make payments or delay payments, it affects their business. However, most of them are very willing to negotiate because they understand tough financial times. To put it simply, instead of defecting on loans or missing payments, talk to your creditors and find common ground depending on your situation. This will prevent them from adding negative information on your credit report and save your rating.
These are the top 10 easy ways to improve your credit rating and score and if you make sure you follow them, you will not have any problems. In addition to that, your credit rating will improve drastically.
