Today, it is highly essential for people to have a good credit score. After all, various banks and other such lending institutions use the same as a benchmark of your creditworthiness. This includes financial lenders, property managers, and insurance providers, among many others. A credit score provides an overview of your past repayment habits, along with your current financial position.
What is a credit score?
A credit score is created from the information that is present in your credit history. When you apply for a line of credit, every financial lender will predict your future behaviour based on this score. It will include how many applications you’ve filled recently, how much you owe, how many credit products you have utilised, and whether you’ve timely paid them off or not. The most recent information on your report will have the most impact as lenders will more interested in your current financial position.
It is on the basis of this score that financial lenders will place trust in you and extend credit at reasonable interest rates. A good credit score is indicative of a reliable candidate, which will subsequently help you attain the lowest possible interest rates by the financial institution.
A credit score ranges from 300 to 900, where a score between 300 and 549 is considered to be weak, while a score between 550 to 700 is seemingly fair. By focusing on understanding the factors that impact your score and taking conscious measures to improve it, you can significantly improve this rating. Let’s talk about some of the ways through which you can improve your credit score.
Avoid taking too much debt at one time
Make sure that the number of loans that you take during a particular period isn’t excessive. The ideal scenario is to smoothly repay one loan and then take another one to keep your credit score from crashing. If you take several loans at once, it will show that you are in a cycle where you have insufficient funds. As a result, your credit score will drop further. On the other hand, if you take one loan and successfully repay it, it will give a substantial boost to your credit score.
Review your credit report
To improve your credit rating, you need to know what is working in your favour and what is potentially harming it. Take out a copy of your credit report that you can avail from any significant national credit bureau like TransUnion. Do keep in mind that it’s not uncommon for banks and other credit companies to make a mistake. If you spot any account that you don’t recognise, dates that don’t match, or any unnecessary fee or penalties, don’t be afraid to call the financial company in question for details pertaining to the same.
Pay your bills on time
If you have a history of late payments, you need to turn that around and make sure that your bills are paid on time. If you have to, make a note in your calendar and keep a close track of your bank account savings and spendings. It’s essential to do whatever you can to get those monthly bills paid on time. Keep that up for several months, and you’ll see a significant improvement in your credit score.
In the end, if you pay your bills on time, keep your credit card balances modest and apply for credit only when you really need it, you’ll have nothing to worry about. For a detailed analysis of your personal financial situation and tips on how to improve the same, reach out to us at email@example.com or give us a call at 1800 200 9898!