Credit scores are all important when it comes to receiving a credit card and without a good one you’ll find it harder to get credit with a low interest rate or even at all. However, improving credit can also be achieved quite easily and with a little time and effort – so, what’s the best way to do so?
Of course, you won’t know what to expect until you go and get a credit report and take a look at the situation you are in. Credit reports show you not only your score, but also what has hurt your credit in the past. Getting a copy is a good idea and looking through it with a fine tooth comb a better one. If there are any errors on the credit score you can then dispute them and have them erased from it. This can make all the difference to your score overall and the interest rates or credit you are offered.
The credit utilisation rate is a ratio between the amount of credit you have available and the amount you use. Needless to say having a low credit use to available ratio looks better to credit companies and makes you look like you aren’t as hungry for debt as you could be. Ideally you should pay cash for purchases rather than put them on your card, so as to keep this ratio low.
Payment history is around 35% of credit scores and the further behind you fall the worse your score will be. So, catch up on your payment and then you won’t have nearly as much to worry about. If you have missed payments or can’t pay on time, talk to your credit card company, they may try and help you out in some way or another. Many have certain programs put in place to help you repay without crippling you.
If your score is poor, one of the worst things you can do is to try and apply for new credit cards or any form of credit. Applying for more than two in a space of a month of so will make it look like you are desperate for credit and in turn mean you end up in trouble in score terms. Avoid doing this.
Use Suitable Credit
If you have bad credit, there are a number of ways to still get credit and these can be used to help build up your credit reputation. Secured bad credit loans and high credit interest cards can provide you with a solution in this case and provide you with credit if you need it. By being responsible and repaying the balance of this credit quickly and reliably you will improve your score.
Pay off Debt
Paying off money helps improve credit situations. If you have a credit card or a loan, repaying the minimum may seem tempting, but you are still increasing your rate of credit. However, by paying off the principal you will improve your situation and gain financial freedom. In time this will work to your benefit.
Improving your credit score is very important and can make life a lot easier for you financially and in other ways too.
Cormac Reynolds has written a variety of financial articles for a number of clients and takes a personal interest in money. He writes this article for http://www.bakerfinancial.co.uk