loan financing

Ways of Improving Your Credit Score

Your credit score helps to determine your financial health. It shows the lender how responsibly you use your credit. Having a better score makes it easier to get new loans and credit lines approved. Also, it opens new doors for lower interest rates when you borrow.

However, you can still get a credit card with bad credit scores, although mostly you will have to get unsecured credit cards. Such cards help to rebuild your credit score hence improve your chances for better credit cards. They do not need security deposits; thus, acquiring them is quite affordable.
Read on for some tips on how to improve your credit score.

Pay Your Bills on Time

timely payment of billsEvery time you apply for credit, lenders will request your credit score report to review it. This because they want to know how reliable you’re in paying your bills. That’s why payment performance is considered a worthy predictor of future performance.

Paying your bills on time can positively influence your credit score and vice versa. Always ensure that you pay your bills on time. You can use available tools such as automatic payments or calendar reminders. They help you to pay on time.

Additionally, when you are behind on any payments, ensure that you bring them forward as soon as possible. Even though late payment appears as a piece of negative information on your report for seven years, its effects on your credit score dwindle overtime. Note that old missed payments have less impact than the current ones.

Review Your Credit Reports

review credit reprtGoing through your credit reports helps to improve your credit by pointing out what may be working for you or against you. You can get your credit report from the credit bureaus such as Transunion, Equifax, and Experian. They can give you one report for free annually, which you can get online. By reviewing each report, you learn what is helping or hurting your score.

You can boost your credit score by paying on time or having minimum balances on your credit cards. Also, having a mix of different loan accounts and credit cards can improve your score. Avoiding making requests for new credit is another way too. It is crucial always to review your credit report for errors and any disputes that can hurt your score so that they can be corrected.

Cut Purchases with New Credit Cards

shoppinng with credi cardShopping with your new credit cards raises your credit utilization ratio. If you have higher balances, your credit utilization goes higher. This affects your credit score negatively. It is crucial to keep your credit utilization rate below 30%. Therefore, you should pay cash for purchases instead of paying them through your credit card.