What is a credit score? We know that you have been hearing this term from friends, and family for a very long time. Well, it’s time that you learn more about it.
A credit score is one of the determinants that can make or break your bank loan requests. A credit score allows banks and lenders to determine if you are a trustworthy borrower or not. This will allow lenders to discern your capacity to pay back your debt. This will then lead to them deciding on how much they are willing to let you borrow, which includes your possible interest and credit card limit.
A credit score will show how good you are at handling your finances. This also shows your financial history and would allow banks to interpret whether you are a risky borrower or not.
If you’re planning to apply for a loan, you must make sure that you have a good credit score to show your bank and lenders. With that in mind, we have prepared a list of how you can raise your credit scores.
1. Pay your bills on time
You should practice paying your bills on time. This does not only include your credit card bills and loans but also your monthly bills such as your rent, phone bills, etc. You must show your bank that you are responsible enough to pay your bills on time. This will show that you are a reliable borrower.
2. Settle your debts
Make sure to practice maintaining your credit card balance. Make sure that it is low in order to have a positive influence on your credit score. This will show your bank or lenders that you do not max out your credit card and that you are good at handling your credit history.
3. Earn additional credit for phone bills and utilities
If you are sure that you pay your bills on time, then we suggest you get an extra credit score for it. There are services that will help you improve your credit scores. Make sure to contact them if you are confident about your financial history.
4. Do not close your unused credit cards.
If you are not paying for any annual fees, then we suggest you don’t close your unused credit cards. If you close your unused accounts, this may increase your credit utilization ratio which we do not want. As long as your not paying for annual fees, keeping unused credit card accounts is a good decision.
5. Do not open new credit card accounts if not needed
We suggest you not open new credit card accounts if not needed. An application for a new credit card account will create hard inquiries which can negatively affect your credit score. An added note is that these hard inquiries may last for up to two years.
6. Keep an eye on credit reports
Make sure to check on your credit reports regularly. This will allow you to find any possible inaccuracies in your account. If issues arise, make sure to attend to them immediately. If you do not tend to these issues, it may negatively affect your credit scores.
We suggest you do your best to keep a good credit score. We guarantee you will thank your past self in the future. We also suggest you contact a broker so that you will have professional advice on how to manage your finances properly.