Are you tired of having a bad credit score and getting rejected for loan approval? In recent times, it is easy to get a bad credit loan from a private lender. However, having a bad score is dangerous for your lifestyle. Your credit report is proof of your spending habit. If you have a bad credit report, it indicates that you are spending more than you are earning. This habit is not a healthy one.
Great news is that credit ratings can fluctuate, so it means if you are credit score is not in good range, then you can improve it. By improving your credit score, you will be saving thousands of dollars. A good credit score is great for several reasons including better interest rates, higher chance of loan approval, easy to get a new credit card, higher chances of getting hired, and more credit card signup bonuses.
This article highlights the tips you need to improve your credit. Continue reading!
Check Your Credit Report
One of the first things you need to do is check your report frequently. This is because there are several problems that can decrease your credit rating. The most common problem many Canadians have to face is identity fraud. This is why it is recommended to check your credit report regularly, so you can prevent similar credit score killers.
If you have spotted something on your credit report that you are not familiar with, you can contact the credit agency. Additionally, if you want to increase your credit score, you have to identify the areas that you need to improve.
Pay Bills on Time
One of the easiest ways to improve your credit score is by paying your bills on time. Paying bills punctually and steadily, you can give a boost to the credit score. It is advised to be patient as it will take some months before it can start reflecting in your score.
New Lines of Credit
Many people think that opening a new line of credit will help improve their credit score. This is just a misconception as it can have a negative impact on your credit score. It is because the new lines of credit will be perceived as less trustworthy.
However, this doesn’t mean that you can’t open new lines of credit if you need to. You just have to be prepared for a decrease in your credit score. With the passage of time, the adverse effects will go away. Hence, you should try your best not get a new loan until you really need it.
Although you should not, in any case, delay your payments. If due to any reason, you are unable to pay bills on time, you must try not to go past one month. This means you should try to make late payments no later than one month. It is recommended to be a month late on two bills instead of two months late on a bill.
This is because most of the companies don’t inform the credit agencies about one-month late payment. So, if you miss your payment by a few days, there is nothing worry about. This because it will not show on your credit report.
Use Your Credit Card Less
When you have to improve the credit score, you can start by limiting your credit card use. This means that you should not max out your credit card. Though your debt utilization ratio matters more, spending to the maximum limit can have a negative impact on your credit rating. For instance, you have 3 credit cards with the max limit $1,000. It will be better to divide the expenses on all the three cards rather than maxing out one card.
So, you should use your credit card smartly and make regular payments. This will help in showing that you are managing your money and it will lead to an increase in credit limit. All these things will help in giving a boost to your credit score.
Another wonderful way to improve your credit score is by automating your payments whenever you can. This is extremely useful if you want to make payments punctual. There are numerous companies that will enable you to schedule monthly payments and keep a track of these payments. It is a great way to make budgeting simple and reduce the risk of missing a payment.
Giving a boost to your credit score is not an easy task, it requires you to put in extra effort and time. However, if you need a loan with bad credit score, a private lender is the best option. This doesn’t mean that you should not improve your credit rating as bad credit score will harm your lifestyle.