Having a good credit score is a significant factor when it comes to taking loans, applying for car financing, and much more. If you are looking for ways to improve or maintain a good credit score, you are on the right page! Keep reading.
#1: Clear off your debts
If you have taken any debts, they will be reflected in your credit score report. Until you make the repayments to clear off these loans, they will have a negative impact. Therefore, clearing off the outstanding ones is essential if you wish to enhance your rating. You can opt for cash loans to pay off your existing debts and have one monthly repayment. This not only helps you save money but it can show banks that you’re making monthly repayments.
#2: Timely payment of the EMIs is essential
Making monthly payments is important, but it isn’t the only factor that should be kept in mind. It is important to make these payments timely as well, otherwise your delayed payments are recorded in the credit report and will impact it negatively. To manage it better, you could set up the option for automatic transfers from your bank account. At the same time, keep a track and make sure that your bank has enough amount for payments. Otherwise, you will have to incur a bounce charge, which can be a costly fee.
#3: Make sure your credit utilization is under the limit
If you make use of too much credit, it shows that you can’t manage your lifestyle with your income. Therefore, while utilizing credit, stay below the limit. Also, use only as much credit as you can repay without much trouble. The ideal approach is that your credit usage should not exceed half of your total income. Avoid exceeding the full amount of credit limit and always work towards paying off your credit card debt when possible.
#4: Report the errors or discrepancies in your credit report with care
There might occur discrepancies in your credit reports. For example, if you are repaying a home loan, maybe your home loan lender has not informed the concerned authority of your latest payments. Therefore, you must keep a regular check on your credit score and get all the discrepancies corrected at the earliest. These discrepancies, if not corrected, will reflect a relatively bad credit score for you.
#5: Make sure you borrow a mix of credit
Borrow a mix of credit to improve your credit score. You could take both secured as well as unsecured credit and repay it timely. Establishing a mix of credit will enhance your credit score positively. This is because borrowing from different places would mean having different interest rates. While some services might offer a higher rate, there would be some with lower ones as well. Thus, taking a mix of credit rather than a single one can help improve your credit score as the bank can review your payments and are capable of making different payments with a mixture of loan requirements.
Follow these tips and it will help turn your credit score to a positive one. Also, it is essential to have patience to see improvements as it might take up to 6 months for changes to reflect on your credit score.