Your credit score is an indication of how likely you are to default on a loan. It affects your ability to get approved for new credit, the interest rate you’re offered and whether or not you get the loan at all. Your credit score is also used by landlords, employers, service providers and others to assess your trustworthiness.
Many factors go into calculating your credit score; some are under your control and some aren’t. Unless you have excellent connections with a lender who is willing to ignore your past indiscretions, there isn’t much you can do about those external factors. However, there are things that you can do to improve your chances of getting approved for future loans and leases. In this article, we explore seven ways that can help boost your credit score so that lenders take notice.
1) Check Your Credit Report
Your credit report is one of the main components of your credit score, so it must be accurate. If there are any erroneous items on your credit report, especially accounts that are incorrectly identified as being in collections, these could drag your credit score down.
If you find an error on your credit report, you can either dispute it or request that the lender who reported it correct the information. If you find that you have a low credit score, the best way to boost it is to pay off any existing debt, including medical bills and utility bills, and then make sure that you avoid incurring new debt. If you have no other option, a credit repair service may be able to help. However, be aware that these are often expensive, and you should do as much as you can yourself.
2) Pay Off Existing Debt
Credit card debt is the enemy of your credit score. If you’ve got a lot of credit card debt and you’re not paying it off, your credit card company is likely reporting it to the credit bureau.
If you don’t pay off this debt, it will show up on your credit report as a negative item that will drag your credit score down. If you can pay off this debt, you’ll see your credit score go up as soon as the reported debt is erased from your report. If you can’t pay off your credit card debt immediately, you can minimize the damage to your credit score by paying the minimum amount due.
3) Review and Respond to Requests for Information
If you’ve had a loan or a credit card before, lenders may be requesting information about you from your credit report. Your credit score may go down if you ignore these requests for information, so you must respond to each one.
Your credit score will likely increase if you can show that you’ve repaid previous loans or credit cards on time. If you were late on payments or if you defaulted on loans in the past, being able to show that you’ve repaid the loan in full or that the account is paid as agreed will likely boost your credit score.
4) Be Careful With New Loans and Credit Cards
When you’re getting ready to apply for a new loan or credit card, you mustn’t apply for too many at once. You probably don’t want to apply for a new credit card if you already have several new and/or high-limit credit cards.
This could negatively affect your credit score as well. If you’re applying for a mortgage, a new car loan or a large business loan, it can be helpful to build up your credit score beforehand. If you don’t have enough credit history to qualify for a large loan, you may be able to get a co-signer who will be equally responsible for the loan.
You can also refer to 5 Tips To Pay Your Student Loan Quick and Easily
Your credit score is a crucial part of your financial profile; so if you want to apply for a loan or a mortgage, or even rent an apartment, you need to keep a close eye on your credit score. Credit scores are based on several factors, and it’s important to keep an eye on these factors to make sure your score is as high as possible. There are many ways to improve your credit score, but the best way is to be diligent about keeping an eye on it and making efforts to improve it as often as possible.