Your credit score is an indicator of trust. Fail to pay back your loans and meet your payments on-time can destroy your rating. If you have a bad rating, or no rating at all, you’ll find it difficult to access the best credit cards, and in many cases the chance to make property and car purchases.
But even the worst credit score in the world has a remedy. You can act today to improve your credit score and open up a golden financial future. And it doesn’t require half as much as you think.
We’re going to give you five fantastic tips for how to improve your bad credit score today.
Cut the Credit Portions
Believe it or not, it’s considered a bad sign if you borrow too much against your limit. You never want to borrow anything more than 30% of your overall limit.
This is considered a bad sign because it demonstrates you’re relying on your credit cards and your loans to survive. Get your ratios down and, if possible, try to pay off a large portion of any maxed out credit cards early on.
Remove the Nuisance Balances
Nuisance balances are any smaller balances on credit cards you rarely use. On your credit score, one of the ways you’re ranked is on the number of credit cards that have balances.
If you have any of these, pay off the smaller balances first and remove the card from use. You should try to constrain your spending to just a couple of cards.
Arguing Over Paid Debt
People are afraid that the car or house they just paid off is going to hurt their credit score for the next seven years. This is how long it takes for a debt item to disappear from your report, but really it’s a fruitless exercise.
Debt you’ve paid successfully is considered a good thing. It’s actually how you build your credit score, so be happy that that item is still on your credit report.
Let the item stay on your credit report. A paid debt is like getting an A+ in high school.
Pay Bills at the Right Time
Stop trying to extend your payment terms, if at all possible. Make every effort to pay bills now.
One of the big mistakes people make is they will also take into account the 60-day extension after the deadline. Whilst this is available if you really need it, don’t use it every single time. It damages your credit score.
Imagine it doesn’t exist and try to pay off your bills on-time. And especially don’t opt for saving over paying bills. This applies to both minor and major bills, and it’s more common than a lot of people realize.
Also, it can help to find a lender that works with people that need bad credit loans. Getting a loan and paying it on time each month can help increase your credit score.
Hinting at risk is one way of sinking your credit score. One of the easiest ways to do this is to pay a lot of money on a bill, and then pay significantly less. This is a sign of your income suddenly dipping, and it makes lenders nervous.
At the same time, don’t borrow a huge amount of money out of the blue (exceptions being student loans and mortgages). Try to keep your borrowing and payment of balances consistent. This will help keep them calm.
As you can see, these are five easy ways to improve your credit score. Anyone can do them and all it requires is a slight change in your behavior. If you can master this style of financial discipline, you’ll find it much easier to improve your credit score and gain access to those better interest rates.