Loans are essential to raise funds for huge projects and to take advantage of lucrative ventures for which there may be no funds set aside. Your credit score is a critical number that creditors or lenders use to determine how creditworthy you are and the terms on which they will lend, if they decide to lend to you. A high or impressive credit score will enable you to easily get personal loans, auto loans, credit cards, and mortgages at favorable rates. Some of the things that affect your credit score are your payment history, length of credit history, and your credit mix. For your own good, ensure you build your credit score and keep it as high as possible, and you will have no problem getting loans and other forms of credit, in addition to other benefits.
Below are some tips you can employ to improve your credit score:
Make on-time payments
One thing that has a huge impact on your credit score is your payment history, as it accounts for 35% of your score. You must ensure you make your bill payments on time and in full, as agreed upon by your creditors or lenders, if you intend to build and boost your credit score. Payments that are overdue by 30 days or more will most likely show on your credit report and will have an adverse effect on your score, which will remain on your credit report for up to seven years. To avoid late payments, you can set up standing orders with your bank for automatic payments of your loans and bills. Alternatively, you can set reminders,be it with your lenders or creditors, so you get alerts when a payment date is near.
Keep a close check on your credit report
It is crucial to comb through your credit report keenly to spot any mistakes that your lender(s) might have made. You can use the free credit report issued by major credit bureaus or ask for one at a fee, as it is worthwhile. If you see anything questionable, reported penalties or late payments, incorrect dates, or any other erroneous entry, make a complaint by phone or email citing the issue and giving all the relevant details. You can also engage professionals, like those from Booscredit101, to advise you and help you improve your credit score using tradelines.
Open new credit accounts only when needed
As much as having a great credit mix can help to improve your score, you must be careful when opening new accounts, and only open and apply for new credit products when you really need them. Having too many unnecessary credit applications can affect your score by resulting in too many hard inquiries, overspending, and piling up a huge amount of debt.
Avoid closing unused credit card accounts
You should avoid closing old credit card accounts that you do not use if they are not attracting any fees, like annual fees. These accounts help to keep your debt utilization ratio low, thus boosting your score. Also, having these old accounts on your report, provided they have a good history, will give you a longer credit history, thereby contributing to improving your score.
Watch your total debt load
The total amount of your debt contributes to 30% of your score, so it would be in your best interest to keenly control your borrowing. If your debt total is high, prioritize lowering it by making payments, and avoid taking out more loans or using your credit card. You can also employ various strategies to reduce your credit utilization ratio.