When it comes to borrowing money or obtaining credit, your credit rating is by far the most important factor. It is the direct decider of what is or isn’t available to you. Higher is always better of course, but a lot of people don’t really know how to get their score up in the first place.
A lot of people end up with bad credit after making some bad financial choices early on in adult life, only to end up regretting it. It’s easy to miss payments and borrow more than you can afford as a youngster. Being in this bad credit position often makes it harder to raise the rating because you don’t have many options available. Today I’m going to show you 4 ways to raise your credit, with all of these tips still being useful even if your credit is already really low.
- Pay Your Bills On Time
This point might sound pretty simple but a lot of people don’t realize how important it is. This doesn’t just mean paying before you get a late notice or anything like that – it means paying on time, in full, every time. The easy way to do this is set up automated payments like direct debits and make sure there’s enough cash in the bank each time a payment is due.
Even paying a single day late can get noted on your credit record as a late payment, which can be just as bad as missing the payment by weeks. It’s this kind of record-keeping on your credit score which you are trying to affect. Each one-time payment is a mark in your favor, so keep making them and keep improving your score.
- Get Rid of Any Debts
Your credit file will have a list of any debts, defaults, and judgments against you. Get a copy of your credit report and check what’s listed on your file. Dispute anything you are unsure about and work on getting the rest of your debts down. The less debt you have, the more appealing you look to creditors. Likewise, having a lot of debt over the long term can negatively affect your credit score.
- Use Loans & Credit Cards Responsibly
I know what you’re going to say here: “Aren’t these tips supposed to be for people with bad credit?” Yes, they are. There are actually specific credit cards which are meant for people with low credit ratings, and loans for bad credit are also a legitimate thing. These products won’t offer the best interest rates, but they’re a way for you to obtain credit and prove you can use it responsibly, making payments on time and not borrowing more than needed. This helps your credit score, which then unlocks better deals on loans and other credit.
- Don’t Apply for Credit Unless Needed
Every application for credit is logged on your file, and a denied application looks especially bad. Unfortunately, there are a lot of people who don’t know this and who just apply for credit wherever they can until they get some. They don’t realize the beating their credit score is taking from doing this. You should limit applications to only what’s needed, and consider it very carefully before applying so that your chances of being accepted are high.