Credit score is a parameter on which lenders weigh the ability of potential borrowers to repay the loan they are applying for. Extending this to the understanding of having a good credit score, it basically implies having a greater chance towards securing a loan or a mortgage.
Itching to have a good credit score but you really don’t know how to do it?
We are here to help you out.
Be Regular With the Payment of Your Utility Bills
Utility bills are part of our routine lives. So much so, that they are now considered as nominal expenses. And if your credit file demonstrate your ability by showing you have been responsible with your regular expenses, chances are that you will show greater sense of responsibility towards paying your loans. Therefore one way of improving your credit score is to be regular with your utility bill payments.
Check Your Credit File
CallCredit, Experian, and Equifax are three credit reference agencies that lenders use to evaluate your credit history. Get your credit file from each of these three agencies and thoroughly review it. If you think there has been a mistake in bio-data or a mistake from one of your creditors while closing your account at the end of the reporting period, get it fixed.
Use Credit Card to Your Advantage
Debit cards may seem a better alternative than credit cards, as any transaction that you are intending to make gets deducted directly from your bank account, thus helping you with your budgeting. But they don’t help you build a credit score that a credit card can. Being regular with your credit card payments, corroborate your credit worthiness and makes you less of a risk in the eyes of a lender. This helps you improve your credit score.
No Need for Credit Hoarding
Unused credit can sometimes result in negative marking of your credit score. Why lenders would be interested in granting you a loan, if you do not add to their business. So if you have too much reserve credit that is not being used, it’s better to get rid of it.
Your Application Matters
When you apply for a loan, lenders not only look at your credit file but they also assess your credibility in the light of that specific application. You can have a healthy credit file while repaying your regular bills and credit card payments but if you don’t have a history involving large sums of debt repayment, this may affect your changes of securing a hefty loan like a mortgage.
Therefore it is advisable to work beforehand on providing a justification on how you would be able to pay a mortgage, if you have never acquired anything other than payday loans previously.
Avoid the Gung-Ho Approach
When we apply for a credit, we tend to box drop applications at almost every finance crediting institution. Believe it or not, but excessive amount of applications submitted over a short period of time can degrade your credit score so always avoid it.
Handling your credit score needs to be taken seriously as it can easily shape or deform your future. However, improving your credit score does not require you to crack nuclear codes. It is a collection of small steps that can be executed easily.