Your credit score will often be the biggest hurdle you have to overcome when applying for loans, mortgages or credit cards, and as such can be the most significant blockage when you’re trying to move your life to the next stage. You can’t replace years of poor financial management in a few days, so there is no ‘quick fix’ for a low credit score; even credit repair services which offer quick solutions are talking about a timescale of months or even years. Having said that, improving a credit score is entirely achievable with the right guidance. Here are five ways to improve your credit score and set yourself up for a brighter financial future.
Find Out Your Credit Score (and What’s Bringing it Down)
Access your credit report and find out what’s lowering your score so you can start to rebuild. Your credit report is a record of credit history and current financial commitments which lenders will consult when deciding whether to give you more credit. It’s what will support or stop you from getting loans, credit cards, and mortgages, so it’s crucial that your credit report is as good as it can be. It will list all your current and past credit cards, monthly repayments, including the late payments and defaulted agreements.
The more positive points you have on your report, the higher your credit score will be and the better the deals you’ll have access to when it comes to interest rates and loan amounts. There are a few ways to get a positive credit score, but you can find more detailed advice on debts, credit cards and loans at Crediful.com.
Pay Off Debts
A big factor on your credit report will be how much debt you have including loans, credit cards, and finance plans. Unsurprisingly, the more debt you owe, the lower your score will be. To improve your score, you should focus on repaying as much of your debt as you can, starting with the accounts which are accruing the most interest. Once you have cleared the highest interest debt, you can use that money to pay off the next and so on. Of course, you need to maintain minimum payments on all your debts, and this is undoubtedly easier said than done.
It can be useful to transfer a high-interest credit card to a lower interest one, but the best solution is always to pay off debt rather than move it (if you can). In some cases, having the same amount of debt but over fewer cards can damage your score even further. If you’re using a high ratio of your available credit, you may want to consider asking one of your lenders to raise your credit limit as this may improve your score.
Correct Any Credit Report Errors
Credit reports are not always accurate, so it’s essential you check through yours thoroughly to make sure there is nothing on there which is dragging your score own unnecessarily. If there are credit accounts which aren’t yours or are no longer open, or your report says you have defaulted on payments, get in touch with both the credit report agency and the lender. After an investigation that finds that the information is incorrect, they will remove it, and your score should improve.
Consider Using a Credit Repair Service
Credit repair services are companies which charge you a fee to help you improve your credit score. You can use these services as a one-off or on an ongoing basis to improve your credit score with a strategy targeted to your financial situation. They will have professional expertise in what changes will make the biggest difference to your score and can help you find lenders which are the most likely to offer you credit.
Build Better Financial Habits
The most effective way to boost your credit score is rather dull: you need to get better at managing your finances consistently. It includes key skills like budgeting and putting savings aside which will take care of unexpected costs, so you don’t have to turn to loans and credit cards.
Of course, if used responsibly, credit cards are a great way to give you financial flexibility, and if you don’t use them, you’ll find your score may be lower as you’ve not proved that you can borrow and repay the money. If you have never had any credit, get a credit card with a low-interest rate and set up payment reminders and/or automated payments so you always make your payments on time. After seven years, negative factors on your report should drop off, so building positive habits now could set you up for a more stable future.