A credit score is something that people easily tend to forget until they need it. But then it may be too late and you would have to get by with the score you already have, which might not be enough. That is why credit score needs to be taken seriously right from the start.
However, it’s more than just means to an end. It will help you organize your finances and prevent you from getting into unnecessary debts. So, here are simple ways to improve your credit score and enjoy the perks it carries.
1. Take care of your bills in time
On time payments are the foundation of a good credit score and that includes even your monthly bills. Even being late with the library books can affect negatively your credit score if the library calls collection agency for your unpaid bill. Take into consideration that not paying your bills in order to save money will only do damage to your credit score and pile up a considerable interest on the existing debt.
2. Pay attention to credit card balance
Even though you have all that revolving credit on your card, it’s still better not to use it all. The less you spend, the better will be your credit score. Pay your balances in time and try to keep them as low as possible if you want to improve your score.
You can pay more than a monthly installment and cover some portion of the overall debt since that will boost your credit rating. Just make sure that your bank allows you to this or even better look for this option when applying for the credit card.
3. Review your credit score report for errors
It’s not unheard of for credit score reports to contain errors but this also means that it can cause you a lot of trouble when you apply for the loan. Correcting those mistakes is also the easiest way to improve your credit score. Things like incorrect information on your address or employer are minor and easily remedied.
However, there are more serious errors that can be a real issue for you, like incorrect credit inquiries or court writs you settled but are not recorded in your file. Therefore, before applying for a loan or a credit card obtain a copy of your file. Remove any errors you find immediately since that will significantly improve your score.
4. Good debts are good for credit score
Believe it or not, having a record of previous debts on your credit score is good for you if you paid them in time. Many people try to remove these good debts from their credit file, but that can actually do more harm than help. Record of your previous debts will provide to the lender a better picture of you which can serve as a recommendation to approve you a new loan.
For example, you will certainly take a couple of home renovation loans in your lifetime. If you paid your installments within the deadline for the previous one that will show you are a responsible person. This means that you will most likely do the same with a new loan and thus you become a reliable candidate.
5. Don’t apply for multiple loans
Applying for loans is not like an admission to a university where you apply to several in order to be accepted at least into one. This can actually create a negative credit score for you no matter if you applied for loan or credit card in more than one place. So, before you start making multiple inquiries, do your research and after you found the best offer – apply for the loan.
This also applies if you have more than one credit card no matter if you used them all. So keep their number to a bare minimum if you want to improve your credit score.
In the end
Always research what you need to apply for the loan or credit card before you actually do it. That will give you opportunities to improve your credit score and obtain all the necessary documentation. Sometimes, all you have to do is remove the errors from the credit record in order to improve your chances, although consider creating a good score as a longtime project.
Mike is an Australian IT support professional. He’s working with companies that outsource their IT maintenance. He often writes about technology, business and marketing and is a regular contributor on several sites.