How can I improve my Credit Score?
Monday, October 5, 2020, 6:00 PM | Leave Comment
It’s always advisable to keep your credit score on the higher side.
You never know when you might need a loan, financing capabilities, credit solutions, etc.
If your credit score is low, you have to deal with more paperwork, lower loan amounts, higher interests, inconvenient repayment schedules, etc.
Regardless of your current financial position, there are always ways you can improve your credit capability.
Practical tips to improve your credit score
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Know where you stand
Check out what your credit report really looks like. AnnualCreditReport.com is a good place to check out your score. See if there are old transactions or history that’s still affecting your score. To know the real value of your credit score, you can request it from bureaus like TransUnion or Experian SA. Knowing exactly where your credits stand will reveal which parts to improve.
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Check for errors and rectify
Examine your credit report closely to detect any inaccuracies. Small errors on your credit history can go on to affect your score, thereby affecting your loans. You can address the errors by reaching out to he concerned bureaus. There are multiple options to connect with the bureaus, such as phone, formal mail, or e-mail. Just ensure that you follow the proper dispute process laid down by the authorities.
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Make substantial payments
Try to make considerable payments that can bring down the debt amounts you owe. Credit agencies will usually compare your debts against your available credit. Make substantive payments until your debt comes down to less than 30% of your available credit. For instance, if your card indicates an amount of $10,000, your payments should aim at bringing the debt down below $3,000.
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Well-timed Payments
Part of improving your credit score includes not-making-it-worse. And making timely payments is one the most practical way to do it. On-time payments may not drastically improve the score. But it will surely keep it from lowering even further. Regularly covering your dues will keep the debt in check and the credit history stable.
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Credit Card Diversification
Using multiple credit cards to increase your available credit is a practical trick. If you’re using a single card, try to get an additional card(s). But make sure that the balance is zero on these new cards. Your credit limit will increase. But your credit utilization will still remain low if you don’t incur expenses on the new cards.
Remember not to overdo this tip, though. A sudden increase in new accounts can look suspicious. Also, if you start accumulating balances on the new card, it will ruin your score even more.
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Minimize Hard Enquiries
Credit checks come in two types – soft checks and hard checks. While soft checks do not directly harm your credit score, hard checks can lower it. The effect of hard checks on your credit can wane off after about two years. So, if you get a new loan/card with a hard credit check, wait out the remaining time frame before performing the next one.
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Balance Consolidation
Carrying multiple accounts and cards with balances can harm your score. Try to get all your smaller debts into a single account. Ensure that the combined accounts’ interest rates are lower than their individual totals. If the consolidated debt becomes lower than 30% of the total, then you’re good to go.
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Clear balances before the due date
Credit agencies do not typically report your balances on the due date. If you run a lot of expenses and still clear it by the month’s end, the bureau may still register your balance. Try to enquire about when your company reports the balance to the bureau. And make sure you clear them before this period.
Conclusion
Your credit score is a crucial aspect of not just your present but your financial future. Combine these steps wisely to ensure that your credit history remains stable and healthy throughout.
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