Having a bad credit score is most certainly a financial faux pas. It can stop you getting the best deals when you apply for a number of things. From credit cards to loans and even to mobile phone contracts. And, most harrowingly, a bad credit score can even go against you when you first seek to put a mortgage down on your new home. So, even if you have no current plans to take the leap and own your home, do something that your future self will thank you for and improve your credit score today. Below you can find a few ways to do so.
Get credit active
Attaining a credit card may not instantly strike you as being the best thing to do when you are taking the venture of improving your credit score. In fact, it may strike you as being the complete opposite of what you should be doing because of the fact that it offers up the opportunity for your credit debts to spiral out of control with ease. Yes, having a credit card does mean that you can negatively impact your score — but that’s only if you misuse the piece of plastic. If you use it for good and to your advantage, the plastic can be the very opposite. It can help you to get credit active, and that is only ever a good thing when it comes to your credit score. Attaining too much debt can be detrimental, but never having borrowed a thing can also be just as detrimental. So, get active on your credit card in order to build up your credit record and history. But just make sure to ensure that you keep your record squeaky clean. When a lender sees this, they will be far more likely to offer you deals.
Don’t get close to your credit limit
Although it is sometimes unavoidable, you should try to stay as far away from spending limit as possible. When you get close to your limit you make yourself seem unreliable for a number of reasons. One reason is that it gives lenders an impression of you being a ‘big spender’. Another reason is that is may make lenders concerned with your ability to keep up with payments. It’s all about depicting yourself in as bright a light as possible to investors. Keeping your balance to no more than 30% of your credit limit is a good way to do so.
Cut ties with old account
You should cancel unused cards, despite any reasons you may come across that call for you to keep them. You should cancel them because it will make you more appealing to potential lenders. Unused credit can be a really big turnoff to lenders. This is because the more credit they see you have on you, the more likely they may deem you to get yourself into credit debt. And when you’re in credit debt, you wouldn’t be able to pay them. And that’s what lenders want to ensure: their payment. If it makes you feel better, once you’ve closed down an account and canceled it with your bank, physically cut your card into pieces. If you’re the type of person that needs closure on things, then this is the perfect way to get it!
If you have a bad credit score, then fear not as it is not a death sentence in regards to your ability to take out loans, contracts and mortgages. There are ways to improve your credit score and ultimately your relationship with lenders. Make sure to check out some more hints and tips on how to do so here.