Everyone wants to have a good credit score as it is important for various and obvious reasons. If you want to get a loan, it is one of the most, if not the most important factor. If you have a good credit score, then the chances of being approved are very good.
However, if it isn’t, then there’s a strong likelihood you will be turned down. This will inevitably cause you problems and anxiety. Getting a good credit score takes time and may even require professional credit counselling services. However, having responsible financial habits will definitely help. There is always room for improvement, so let’s take a closer look at some great ways to improve your credit score.
1. Pay Bills On Time
Lenders want to make sure that you’ll pay back your debts. If you can manage to always do this in a timely manner, then it will show that you’re not only reliable and responsible, but it will improve your credit score. Any bills you have should always be paid on time, not just one or two and not just the main one. That means you pay your rent, utilities and other bills on time. If at any time you make a late payment on anything, it’s not going to go under the radar. It will show and it will hurt you.
2. Keeping Low Balances
It’s understandable that you have to use your credit card, however, whenever possible, try not to use it too often. If your balance gets higher and higher, this is going to hurt your credit score. Lenders will know of this and you can’t keep this information away from them. Making timely payments and keeping lower balances will help your credit score.
3. Don’t Get Too Many Cards
Some people, for whatever reason known only to themselves decide to get more credit cards, thinking it will help them in some way. It doesn’t. Don’t apply for more cards all at once or within a short period of time. Every time you apply for one, or if you apply for a loan, it will have a negative impact on your credit score. If you do this, it appears that you are either really desperate for money or that you are willing to pile on more debt. If you are to apply for more cards, you need to spread the applications out, not apply for five in a five-week period.
4. Don’t Cancel Any Cards
Another thing people tend to do innocently is to cancel one of their credit cards. If you do this, the debt to credit ratio will go down. Ouch! This will negatively impact your score. Lenders like to know that there is excess capacity but you can control yourself well enough so that you don’t use it. One thing that can help is to use that card to make small purchases, ones that you can afford to pay off immediately, and that can actually help.
Lenders always want to know that you don’t borrow more than what you can afford. Always try to pay down your debt. Another thing lenders like to see is a diverse credit mix such as a car loan, mortgage and instalment loans, so the money borrowed is diverse, however, do not borrow just for the sake of doing this!