By Euro Weekly News Media •
Published: 31 Jan 2020 • 18:51
Your credit score represents your creditworthiness. It shows how active and responsible you are when it comes to your loans. It is also a measure of your financial capability.
A good credit score will allow you to a better chance of loan approval. Lenders will also give you a higher credit limit. You also have the lower interest rate and premium rewards. It can also pave the way to raise the amount you need for either a home improvement, a car loan, or financing your wedding or travel.
On the other hand, if you currently have less than desirable score, you’ll have a limited chance of getting approved for a loan. No worries, you can still improve your credit score. We’ve listed some of the ways to achieve good credit. Read on.
Request a credit report to know your current credit status. This report is a detailed breakdown of your credit history. You can request at least once a year from reporting agencies or credit bureau.
If you don’t have any idea how your score stands, check it on major credit bureaus. They also have a rundown to where your credit score might fall. You can also refer to online lending platforms like creditninja.com that provides information regarding credit scores.
You may want to review the details of your report carefully and intensively. If you encounter some discrepancies, notify them to have it corrected to help improve your score. The most common errors on credit reports include inaccurate account information, fraudulent personal details, and fraudulent accounts.
Aside from affecting your credit score, discrepancies in your credit report may also affect your job searching. Employers also use the story when deciding to hire someone for jobs that require handling finances.
Also, most utility companies use the credit report in determining whether they will provide service. The report serves as the basis of whether the person can pay for utilities.
Most credit scores are computed based on credit usage, age of credit accounts, credit mix, new credit inquiries, and payment history. Payment history usually has the most percentage in determining your credit score.
To improve your credit score, consider paying your debts delinquently. You can mark it on your calendar, create a planner, or set it to bill your from your bank account automatically. You can also pay all your previous debt on your credit card. But, make sure to settle after a month or before your credit card will due. Your credit score may improve significantly.
If you have any missed payment, make sure to pay in immediately and stay current with your payment status. The longer you stay on top of your payments, the higher the impact it will give to your score.
Keep in mind that lenders keep tabs on your profile. You may want to space out your credit application or avoid applying frequently. This kay gives the impression that you are reliant on loans and credits.
You can apply every three to six months or when your credit score gets better or after you’ve paid your debts off. Remember that keeping too many open loans can also send you to a financial cycle.
Also, avoid applying for multiple credit cards at once. Applying for several credit cards may result in a “hard inquiry.” You’ll be flagged, and numerous hard inquiries can affect your credit score. Your credit score after the hard inquiry will increase if your credit application was approved. However, if lenders deny your application, your credit score will significantly fluctuate.
Keep in mind that whether your application is approved or denied, hard inquiries will remain on your account for two years. So, it’s best to have multiple credit applications at the same time.
If you’re able to pay your debts consistently on time, you can also improve your credit score by paying more than the minimum or paying multiple payments a month. If you’re making multiple payments in a month, it will reflect a positive indication that you are on top of your credits and capable of paying more than what’s due.
Aside from making your credit balance decrease faster and lessen the time you’re paying for the debt, making multiple payments can also make your utilization rate low. The utilization rate is the reported balance divided by your credit limit.
A low utilization rate serves as additional insights on how well you are handling your credit. Ideally, you should keep your rate at 30%. The best rate for a higher credit score is at 10%.
Improving your credit score won’t happen overnight. It also requires consistency, diligence, discipline, and management. These traits can be learned through practice and following the tips above.
Always try to keep them in mind, especially when handling your finances. You’ll be rewarded with a good credit score eventually.
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