We all know that getting a loan approved, needs a good credit score. Credit scores are what lenders use to check a possible debtor’s capability to pay back a loan. What do you do if you have a bad credit score? Can you still get an application? You may even get approved, but realistically speaking, you will almost always have trouble getting that loan approved.
Another thing to worry about having a bad credit score is you’ll probably have a hard time securing a job. Believe it or not, some companies use credit reports as a basis to hire employees. Credit reports are essential as they are a reflection of an applicant on how responsible and trustworthy they can be when they get hired.
If you’re one of the people who need help in improving their credit scores, don’t worry. Don’t give up as there are lots of ways to improve your credit reports. You just have to work hard and be willing to give up a few luxuries you’re currently enjoying. Here are some more tips to get you started on increasing that credit score of yours:
Know your Credit Score
First of all, you should always know how good or bad your credit score is. A credit score is usually measured between 300-850. 300 is the lowest score, 850 being marked as exceptional. Boosting programs such as Experian Boost can show you what your credit score is.
Not only that, since it’s a boosting program, it’ll increase your credit scores positively, once you apply for it. Several programs, like the one mentioned above, often have stipulations that you need to abide by. For example, Experian boost works by allowing them access to your banking information.
They then use this information to look for eligible payments for the past two years. These reports let them see how you’re paying for utilities such as water, cable, power, and even mobile phone bills.
Credit Cards can help
Believe it or not, having credit cards can increase your credit score. As long as you’re going over your credit limit or it isn’t costing you any money, keep your credit cards open. Having a reasonable amount of credit cards is one factor that most lenders want in an applicant. Lenders will consider that their debtors aren’t limited to a few options when it comes to paying back loans.
A lot of people become scared when they have unused credit cards because they think it can be used against them. Contrary to that belief, closing an unused credit card increases your credit card utilization ratio, which negatively affects your scores.
Pay your bills on time
Being responsible can go a long way, especially if you want to affect your credit scores positively. Just by paying utility bills on time, can show lenders how responsible you are when it comes to bills. A history of good behavior and paying bills on time will show on your credit report. Although this step is a bit slow, you’ll eventually have a positive impact on your negative score. Be responsible, and you’ll slowly but surely get there.
Don’t open new lines of credit
As you can remember, we told you to keep a “reasonable” amount of credit cards with you. A lot of people often mistake “reasonable” by opening and applying for credit cards. Although you can increase your credit limit by applying for new credit cards, the application process sometimes utilizes “Hard Inquiries” on your credit report.
Several requests for a hard inquiry can negatively impact your credit score. And they’re especially tough to get rid of. Hard inquiries appear on credit scores and can take up to two years to remove.
Most people fear the idea of applying for debt consolidation as it’ll only give them a negative impact on their scores. What they don’t know is that debt consolidation enables you to manage all of your debt by combining it into one payment per month. Although it won’t reduce or forgive your debts, you’ll have a much easier time paying your debts in one go.
Debt consolidations are like advanced loans that are used to pay other loans. Although you’re applying for a loan which technically means more debt, your older loans will be marked as paid in full.
Just be diligent in paying this new loan on time. Eventually, credit agencies and other lenders can see this and will mean that you’re responsible and working hard to repair your debt issues.
When you feel that you’re out of options because of a bad credit score, don’t lose hope just yet. There are lots of ways on how to improve your scores. Knowing what your score is, is an excellent first step. After that, you can utilize programs that can positively affect your score. You can also opt for debt consolidation, which will make payments much easier for you.
Just by being positive and responsible, you can up your score eventually. Paying your bills on time, avoiding any hard inquiries, and keeping a reasonable amount of credit cards can surely help you. Though it can take a long time, you can be sure that all your hard work will pay off by rewarding you with a good credit score.