The importance of having a good credit score cannot be overstated. When looking for a place to rent, landlords are more inclined to give you the place. When applying for loans and mortgages, you are more likely to be approved with lowered interest rates. And at times, banks and financing institutions may give you better terms than someone with a poor credit score.
Institutions will look at your credit score to determine the likelihood of you paying back your loans, credits, or mortgages. If you are checking out rent to own laptops or wanting beds on finance, bad credit could get in your way.
Here are some tips to improve or fix a bad credit score:
Reevaluate your Credit Score
There are three major agencies that compute credit scores in the United States, and you have the right to see at least one of those for free every year. Reevaluating your credit report regularly will allow you to catch errors that are affecting your score.
When reviewing your credit report, pay attention to inaccurate information and dispute it. For example, there could be errors such as misspelled names, debts listed twice, paid debts that are not yet closed, and the like. Over 1 in 4 consumers in the United States report errors from credit scoring agencies.
If you notify the agency of these errors, it’s an easy fix to raise your credit score.
Pay Twice in a Billing Cycle
Many people’s incomes rise and fall, so if there’s a time when you have more to spend, paying your credit card more than once in a billing cycle is a way to raise your credit score. It lowers your credit utilization, which makes up 30% of your credit score.
Let your Rental Payments Carry Weight
If you are renting a property and are paying on time, it could significantly improve your credit score if you make it count. However, this requires some heavy lifting.
By using a rent-reporting platform where landlords report their tenant’s payments to the credit scoring agencies, your monthly rent payments can improve your score. Some of these platforms also allow tenants to report the payments themselves. These platforms, with your permission, share financial data through open banking that allows your on-time rental payments to carry weight to your overall credit score.
Pay your Debt with your Savings
This one sounds like a cut and dry solution, but for many, it isn’t. Many people try to hold on to their savings and often never consider using it to pay their debt.
However, if the interest on your debt is more than what you earn from your savings, it would make sense to use at least some of your savings to pay what you owe. It improves your overall credit score and can help you regain your financial footing down the line.
Do Not Reapply for a Loan Right Away
When you are turned down for a loan, it’s not a good idea to turn to another financial institution and apply for another one. It will instantly be considered a red flag and indicate that you're in dire financial straits. Experian, one of the credit reporting agencies, confirms that not opening a credit account for six months improves credit score by 50%.
Final Thoughts
Establishing your credit score or rebuilding it requires patience and planning. The best way to keep your credit score up is to never compromise it in the first place. Realistically, though, rough patches can derail the best-laid plans.
If that happens, remember to be even-keeled and handle it to the best of your ability. Make on-time payments, pay off your debts with savings, and review your credit score regularly.
Also, keep in mind that your credit score is an essential tool over time, so it really is worth building it up. Whether you’re trying to get the best deal on a mortgage, add capital to your business, looking at rent to own laptops, or planning to purchase beds on finance, bad credit should not get in the way of you getting what you need.
Source: http://instantfinance24.com/product-category/amazon-furniture/
