What is a Credit Score?
Credit Score is number which shows how you lead your finances. It gives the bank an information whether or not you’ll be able to pay the money back. It also gives a reference connected with your past accounts about how you managed them. It will be useful to get to know lenders: Whether to lend you to ? and How much to let you borrow? However, the most recent information is the most important because the bank will be the most interested in your current situation. It is a good idea to regularly check your score as it may be helpful in spotting any mistakes in your banking. Additionally, your credit history can enable you to get things like loans, insurance, and mobile contracts.
7 Tips to Improve Your Credit Score
If you wondering how to achieve financial success or be more likely to have a good credit score with your lender there are some useful tips. It’s not a secret that your credit score plays an important role. If you have a poor credit score, you can end up without getting approved for an apartment or getting a low-interest rate on a house loan.
Lucky for you, I’ve prepared plenty of easy tips you can use to begin building great credit. Follow these steps and you will succeed without a doubt.
1. Create signs of stability
Paying on time your installments for the car, landline phone or internet contract. These are things that help you prove to lenders that you’re able to manage your finances effectively. What is more, lenders will be more comfortable if they see evidence that you have lived at one address for a considerable amount of time. They will not support these ones who are moving home a lot. Keep this in mind if you’re a person who is changing the place of residence from time to time.
2. Make sure to pay bills on time
It connects with the point above. One of these things that may have a negative influence on your credit score is definitely your daily payments. In this case, be sure that you have paid all your bills on time. In case when you do not take care of everyday expenses it is easy to get lost with it. In order to avoid missing payments, you can use automatic payments option in your settings. It will assure you that you’ve made all the required transactions without bothering you. You can also set up a reminder on your calendar which will remind you of unpaid bills.
3. Use less than 30% of your available credit
Using too much of your available credit hurts your credit score. Companies often use it in order to determine your score is credit utilization ratio. If you have a credit card with a limit of 10 thousand dollars, and your balance is the amount of 3 thousand dollars it is said that your credit utilization is at 30%. In this case, what you can do is to use an appropriate amount of credit if you want to keep your score high.
4. No more risk
You have to keep in mind that if you have an open account that has high credit limits you should no more use it. It might lead to a reduction of your score because the future lenders might view you as a high risk.
5. Be aware of a fraudulent activity
For example, if someone applied for credit in your name without your knowledge it might be the sign of fraud. Remember that you ought to inform the credit reference agency in order to avoid further complications. Every time something on your account is incorrect or doesn’t apply to you you should contact your bank immediately.
6. Monitor your credit
Unauthorized accounts, credit cards that do not belong to you are things that easily bring down your credit score. If you wondering how to get rid of erroneous charges you can search for services that enable you to review your credit report and monitor it. There are plenty of them on the net.
7. Put old debt on your report
Some people believe that old debt on their credit report doesn’t look really good. Immediately after getting their car or house paid off, they try to remove the debt from credit reports. It isn’t really worth it. You should try to leave old debt on account as long as possible. You had better be proud of the debt that you’ve handled and it’s better for your score.