Tips on How to Improve your Credit Score
Posted on August 11, 2008 | Filed Under Finance
You are unable to borrow despite great efforts. In all probability,your credit score has let you down. Credit Score of every loan applicant is taken as a guiding factor before further appraisal. People with low credit scores are more likely to be rejected for a loan or at best be given a small amount for a loan, with a high interest rate and a shorter time frame to pay the loan.
In contrast, people with high credit scores are given higher amounts of money for a loan, lower interest rates and longer time frame to pay the loan. A good credit score signifies lower risk and a perception of better ability to repay.
Follow these simple yet effective factors abd improve your credit score -
1. Pay on time
One of the factors that affect credit score is your reputation for paying your bills. Even if you pay them, but always late, it can still affect your credit score. It is important that you keep a payment schedule if you really want to raise your credit score a notch.
You can do this by keeping track of all your bills especially your credit card statements. This way, you will not only incur additional charges in terms interests, you will also build for yourself a good credit history.
2. Control your spends
It goes without saying that your credit card influences your credit score big time. If you often have credit cards that are maxed out and well and beyond its credit limit, your credit score will become lower. This is because a maxed out credit card reflects a spender who cannot handle finances. This kind of person is a risky candidate for a loan.
3. Limit Your Borrowing Sources
It is a common practice to submit loan requests to multiple lenders simultaneously. Stay away from doing so. Although banks do not actually check with each other, they do have their own ways of finding out if you have also borrowed money from other institutions. If this is the case, your credit score will take a nosedive.
This is because people who borrows from a lot of companies are seen as too desperate for money or is too needful of it. Some see this as a dubious way of acquiring money. So if you are afraid of getting rejected and you just want to make sure that you will get a loan, try waiting for one response before starting an application in another. That way, your credit score will not suffer.
4. Try to clear your debts
You may find willing lenders because you are a good payer, too many outstanding debts will create a bad impression.You may be paying your debts but you have a lot that you are not finished paying yet. This is also not good in your credit history.
If you have multiple debts and some funds hand, then it would be a good idea to settle one or two debts in full. That is one less debt for you to worry about. This will not only bring you a step closer to financial independence, it will also improve your credit score - tips to improve credit score - strategies for improving credit score.
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