Are you facing serious trouble or major delay in getting your loan application approved? Are you not getting a favorable rate of interest as one of your colleagues? Then it is definitely time to check out your credit score and start working on to improve your credit score.
Credit score basically refers to the ease by which you can get your loan approved at some of the best rates of interest. To improve your credit score is definitely not rocket science but it can neither be improved in one day. It needs planning and a systematic approach. You give time, money and effort and in return, you will get a good credit score for yourself.
We have come up with some of the most authentic ways by which you can become one of the most reliable debtors in the eyes of your creditors:
1. Take care of the accuracy of the credit report
It is very important to understand and take note of the point that credit reports are more or less a reflection of your credit score. So if you want to improve your credit score don’t forget to check your credit report for any mistakes.
Credit reports are usually given by my major credit bureaus. It has been observed that one out of five credit reports has factual or printing mistakes in that.
If you notice any such mistake, get it rectified as a priority so that your credit score does not suffer due to that mistake in the credit report.
2. Categorize the mistakes which actually needs to be addressed.
Another very important point to be noted is that not all mistakes in the credit report will contribute to a bad credit score. For example, if your name has been misspelled in the personal information section, it won’t lead to a bad credit score. On the contrary mistakes like mention of some late payment or missed payment when you remember to pay it on time, or reporting of all your accounts even the ones you do not operate anymore, mistake in your social security number, presence of accounts or transactions which you do not recognize are some of the mistakes that can harm your credit score. These are the things which should be addressed on a priority basis.
3. Have a plan and work on it
A bad credit score is not the end of the world and you can always work on its improvement. All you need to do is have a plan and work on it. Things, like keeping your credit card balance on the lower side and start paying off debts rather than rotating them, can help a lot.
Apart from that don’t close your any current credit card just to improve your credit score. In the same way, don’t open a new account or apply for a new credit card just to show improved credibility. Go slow about it and step by step build a reputation of being a responsible creditor.
4. Fill the old potholes of late payments
If you think that closing old accounts will erase the signs of late payments or payment due for you, then you are wrong. It will not erase anything and it will be there to haunt you till you take charge of things and set the things on the right path. Setting up payment alert alarms on payment due dates and keeping yourself organized is a good idea.
Make sure you set your credit card payment date in relation to the date when you get your salary check. It will be easier for you to make payments on time and avoid delays. Credit card companies are usually quite forgiving about one or two late payments if you have a history of timely payment. But don’t make it your habit to pay it late every time you use the credit of that company.
5. Build a Strong Credit age to Improve your Credit Score
Strong credit age basically refers to having a long history of making timely payments. It is not built in a day or two, on the contrary, you should invest minimal of one year in it.
If you have acquired a credit card recently, then make small purchases and do timely payments in order to show that you can easily manage monthly payments.
Credit age of five years or more will earn you a much higher credit score than the credit age of one or two years. The more credit age you will earn the more chance you will have to improve your credit score.
Slowly and gradually make regular transactions using a credit card and do timely repayment to get a good credit score.
6. Make sure you clear up the collection account
Constantly transferring your old debts to new accounts will neither erase their trace not earn a good credit score. It is better to handle the situation once and for all and clear the debts.
Contact the debt collector mentioned in the credit report and try convincing him for not reporting your bad debt to the credit bureau and instead take the entire amount at once.
This may violate some of the rules of their agreement with the bureau but there is no harm in trying.
7. Get yourself a secured credit card
If you have a history of bad credit or have declared bankruptcy you cannot let that hunt you forever. On the contrary, you can get yourself a secured credit card.
Secured credit card basically refers to a kind of account in which you will have to make some deposit in advance before you start using the credit card.
The credit card company can offer a credit limit equal to the deposit you have made in the account. Though some companies also offer a limit higher to the deposit made in the account.
A secured credit card gives you a fair chance to improve your credit score. It not only reduces the chances of bad debts by many folds but from now on you can make small purchases, make timely payments and build a good credit age for yourself. It is one of the safest means for both the credit card company and the user.