How To Get A Better Credit Score
You never really know much about your credit score in your younger years and sometimes you’re completely oblivious to the fact you have a bad one until it’s too late. The damage is already done.
If you find that you tend to be rather terrible with money which usually leads to being in all sorts of debt then you need to do two things – firstly, you need to get better at managing your funds. Stop spending money that you don’t have on things you don’t need.
Secondly, if your standard of living surpasses how much you’re actually earning then perhaps you need to consider other ways of making money. It doesn’t mean that you have to quit your job just yet – no, there are alternative ways of making money and you could earn an extra income by doing other things on the side.
If you’re wondering what exactly a credit score is then here’s a basic summary. It’s essentially a rating every person receives based on their income and ability to pay back loans they have taken out in the past. It’s your economic trust level – in simpler terms, it’s how much you can be trusted to pay back any money borrowed and how good you are at fulfilling your financial obligations.
Therefore if you have a bad credit score next to your name, what that essentially says is that you tend to fail to fulfil your financial obligations and that makes you a risk to lend to. In other words, with a bad credit score you will have a big red question mark next to you name – or worse, a fat cross instead!
There are some companies that will offer bad credit payday loans to individuals who need help through a temporary financial shortage, but they are harder to come by. Don’t let it get that far though and instead focus on trying to improve your credit score using the suggestions below.
1. Be consistent with paying back what you owe
If you already have loans against your name, one way to start improving your credit score is to prove that you are capable of paying back money you owe – and consistently, too. Missing payments, especially on a regular basis will reflect very badly on you and with each missed payment, your credit score will start to decline at a drastic rate.
2. Pay your bills on time as well
It’s not just your loan repayments that you need to be paying off. Part of building a good credit score is simply being able to pay your normal bills on time each month, every month without fail. You don’t need to go splurging the cash to prove that you can get a good credit score. The simplest way to get a great credit score that will have credit lenders fighting over you is to make sure you pay off all the regular things most of us have to on a monthly basis. Make your mortgage or rent payments on time every single month, don’t miss a payment for your loan car, get your insurance sorted and try to avoid skipping months because of bad budgeting.
3. Keep your credit card use to a minimum
This one won’t exactly come as a surprise. One of the biggest factors in anyone applying for a loan is how much credit you’re actually using. And yes, you guessed it – the less credit you’re using, the better your credit score. Try to keep it at 30% of what you’re allowed or lower if possible.
4. Don’t rush to shift old debt from your report
This is a common mistake that many people make thinking it will look better, but it can actually do more harm than good.
Some people rush to get a debt removed from their credit report as soon as it’s paid off, but leaving it on there can actually be a good thing. If you can demonstrate that you’ve had loans in the past and had paid them off responsibility by meeting your financial expectations on a monthly basis then that will actually be put down as good debt, which is what you want.
5. Pay off the small debts spread across numerous cards
One of the easy initial steps you can make is to pay off those pointless, “nuisance” debts that you’ve probably forgotten about because they are so small. You know, the ones you used to grab the odd meal here or there or to buy some electric when you were running low. The best thing you can do is gather them all up and pay them off if you can. It’s better to have one or two go to cards to use when you really need some extra credit, rather than have an entire purse full of them.
6. If you can’t make ends meet, seek advice on how to do so
If you know that you can’t meet your required payments anymore, rather than doing extra damage to your credit score with every missed payment that occurs, seek assistance from a credit counselling service and see if you can lower payments so that you aren’t technically missing them anymore. Whilst this won’t actually rebuild your credit score, it will stop you from doing extra damage to it over time when you’re in a tricky situation. It’s a bitter cycle and one you need to escape sooner rather than later.
7. Don’t feel like you can’t have credit, but use it wisely
Not having credit in your name can actually be just as bad as having too much when it comes to borrowing money. One way to get a good credit score is to have credit cards and loans, but pay them back when you’re supposed to. This will help build your credit rating back up, rather than having absolutely no credit cards at all.
There is no quick fix. Getting a good credit score takes time for everyone, so of course when you are trying to recover from a particularly bad rating it’s going to take even longer to rebuild once you’ve sorted the damage.