A credit score report is a vital piece of information which indicates how well you manage your finances. It is a statement telling your potential lenders of how effective you are when it comes to managing credit properly. One of the benefits of having a good credit score is finding it easy to get approved for a loan or new lines of credit because your credit report statement is a testament that you are a good payer and you will be able to manage your bills. Getting new lines of credit won’t only be the perks you’ll enjoy, your lender will surely provide you with the lowest to zero interest rates when you borrow.
Rean on as the financial experts from Fix Bad Credit share some of the effective ways on how you can improve your credit score and a couple of ways to maintain your good standing.
- Pay Your Bills on Time
This is a no brainer. Lending institutions won’t likely favor those borrowers who do not know how to pay their contractual obligations on time. The rationale behind this is simple: no sane person would put their money in something that won’t give them the return they are looking for. Lenders are businessmen who always weigh the pros and cons of a business deal before they extend money; if a person, based on their credit reports, appears to likely abscond or at least not able to meet their obligations, chances are they won’t be a good fit for lenders as a potential borrower.
As a borrower, improving your credit scoring history should be on top of your priorities as you’ll never know when you’ll need a new loan or new line of credit. Inability to settle an account for an amount less than what you’re supposed to pay or unable to pay on time will adversely affect your standing, resulting in bad credit scores. Thus, if you want to get a good leverage the next time you apply for a loan, ensure that your credit report shows that you are a responsible debtor on all your bills. It is also helpful to use some tools within your reach like calendar reminders to remove the risk of forgetting to pay your bills.
- Review Your Credit Reports
This should be your first step in making sure that you’re maintaining your good standing with your creditors. Definitely, you cannot improve your credit score without reviewing your credit report first. To accomplish this, simply pull out your credit report to see what is harming your credit and what’s helping you. Some of the factors that may negatively impact your credit score are late or missed payments, high credit card balances, and judgments; on the other hand, on-time payments, a mix of different credit card and loan accounts, low balances on your credit cards and minimal inquiries for new lines of credit will positively affect your credit score.
- Apply for and Open New Credit Accounts Only as Needed
One must bear in mind that opening a new credit account must only be resorted to when it is highly needed. If you are just opening a new one to fatten your credit score — then you should think really hard about it as it may only cause you harm to your credit score than improving it. In other words, do not open a new account just to get a good credit mix. Unnecessary credit would potentially injure your credit score in multiple ways like always getting tempted to overspend more than you actually afford, among other things.
Hard inquiries is another downside of opening too many new credit accounts. These inquiries may seem harmless to you but the reality is they may be seen by the bank as an indication that you need more money because you are in big financial trouble, and this fact posed as a big risk to take on the bank’s perspective. Improving your credit score does not always involve applying for new credit, in fact, it can simply be done by staying away from a new account as maintaining a good standing with your current ones suffices.