Everyone has great ambitions for their future. Regardless of what age you are and what job you do, you always want a better quality of life and a more affluent living standard. Even if you live relatively affluently, there is always scope for a lot of improvement.
However, all these great plans you have can be thrown into jeopardy if you have a bad credit score. A bad credit score can cause you not to be given sanctioned loans and keep you away from often essential lines of credit. In addition, a bad credit score could have you turned away from getting credit cards or even renting accommodation.
Hence, it is crucial to retain a good credit score from the moment you start earning. A good credit score opens multiple opportunities for you and also keeps you away from unnecessary run-ins with the law. If you have significant plans for the future but have bad credit, there are a lot of ways to improve your credit score.
Let us take a look at some steps to do so.
Small and Active Credit Card Spending
There are two main parameters that a firm will look at when it comes to information on your credit card – whether you are using it often enough and whether you are able to pay back what you are borrowing using the card. You must keep your credit card active while not defaulting on your loan.
The surest way to do so is to pay off your regular bills using your credit card. This way, you will be using your credit card often enough, without necessarily having to borrow more than you can payback.
Low Credit Utilisation
Unless you suddenly require a large amount of money, make sure that you keep your credit utilisation low. If your credit score is low, it is safe to assume that the amount of credit available to you will also be less. Even among this available credit, try to utilise no more than about 30%.
You can do so by keeping weekly tabs on your credit utilisation and seeking alternative ways of payment once your credit utilisation has gone above the threshold. This might require severe self-discipline and even austerity to some extent, perhaps by scaling down your christmas expenses or other holiday and luxury expenses.
Fix Your Credit Report
Your credit report is a sophisticated document, but that doesn’t mean it can’t have errors. It is essential to read your credit report in detail and check if there are any error pushing your credit score down.
Common errors in credit reports include accounts being retained as open even after you have closed them.
Join the Electoral Roll
Getting on the electoral roll is a more indirect way of improving your credit score. Once you have registered on the electoral roll, agencies are able to verify you to a much greater extent. This helps them ascertain your identity and ensure you have nothing to hide.
You can register to get on your electoral roll online. After registering, you need to check with local authorities whether your registration has been logged.
Make Limited Credit Applications
The number of credit applications you make can be an integral deciding factor in your credit score. This is due to the fact that as soon as you make an application for credit, the bank carries out a hard search on your credit history. This has a detrimental effect on your credit score.
It is hence prudent to make credit applications only when you need them. If a bank refuses your credit, look for other avenues for an infusion of funds but do not apply again to another bank.
Several banks and independent websites now offer an online tool known as an eligibility checker. An eligibility checker basically asks you to input your financial and personal data and provided information about the amount of credit you are eligible for.
This communicates your data to the bank but is not harmful to your credit score. Additionally, an eligibility checker also provides you with an insight into your personal credit condition and the extent you need to improve it.
Get Bills in Your Name
A mistake that several domestic consumers will make is not having their names on their utility bills. Their bills might be in the name of their landlord, parents, or someone else.
Because you are regularly paying these utility bills, you are pushing down your credit score by not taking credit for it. Paying your utility bills can help you improve your credit score by leaps and bounds, improving agencies’ trust in your ability to pay on time.
Pay Bills on Time
Once you have your name on some utility bills, it is also important to consider whether you are paying these bills on time. Going overdue on regular utility bills is one of the surest ways of ensuring that your credit score goes down. Very simply, if you can’t pay your utility bills, it is hard for agencies to presume that you will be able to fulfil your credit obligations.
You can set up your bank account in such a way that your utility bills are paid automatically, and you do not have to wait for a date to pay them. Additionally, you can take prepaid utility plans that require you to pay before you use a service.
Look Out For Identity Fraud
Identity fraud is much more common than you might think it is. Millions of people fall victim to identity fraud every year. Cases of identity fraud can be clear as day in your credit report, but you still might not be able to identify them.
You must read your credit report with immense care and in great detail. Look out for any expenses that you think you have not made. Identity fraud often happens only through small, regular payments that add up to a huge amount.
There is no standard of a good credit score. A good credit score is different for different people, depending on their credit requirements and life ambitions. The above steps will help you achieve this score even if you have fallen below your standard.
Your credit score must never be a hindrance to your dreams. Achieve a decent credit score, and go on to attain your ambition!