Whenever applying for a loan or a new credit card your credit score plays a crucial role in getting you approved for them, therefore it is safe to say that credit score directly determines your creditworthiness. It goes without saying that those with better credit scores are more likely to be approved for new loans and credit cards than those with lower scores. In fact, having a high credit score can also allow you to negotiate cheaper interest rates. Lenders value a credit score highly since it informs them of the level of risk.
Ways To Increase Your Credit Score:
Make Multiple Payments
The number one rule of improving a credit score is to make multiple payments. Since you’re probably paying over the minimal sum necessary when you make repeated payments, your debts will disappear more rapidly.
Settle all of your Balances Promptly
Paying your bills consistently on time and in full will also be a significant factor in enhancing your credit score. Your creditworthiness will be negatively impacted by a skipped payment, which can appear on your credit file for up to seven years. In addition, if you only make the minimum payments, interest will be applied to the entire outstanding debt of the subsequent billing period.
Examine your Credit Report Thoroughly
This is another element that can raise your credit score. A thorough review of your credit report can benefit you in two ways: first, it will alert you to any errors that may have occurred there; second, it will reveal the factors that are lowering your credit score. In order to raise your credit score, you can therefore perform the required actions. Additionally, be sure to notify the credit reporting agency if you find any inaccuracies in your credit score.
Keep a low percentage of Credit Card Utilization
Your rate of credit utilization is yet another significant factor that is looked at when calculating a credit score. A credit utilization rate is a ratio of how much credit you are now using in relation to the total sum you have access to.
If possible, get a Credit-Building Card
If all other options have been exhausted, the best option is to apply for a credit-building card. These credit cards are also ideal for people with a poor or non-existent credit history.
Keep Unused Credit Card Accounts Open
The majority of people mistakenly believe that cancelling an old, inactive credit account will raise their credit score, in reality, it will have a totally opposite impact and will affect your credit score. Closing a credit card shortens your credit history which is not a good thing in the eye of lenders and it also lowers your available credit limit which in turn, increases your credit utilization percentage.
Don’t worry if your credit score is low. It might seem as though you are stuck in this situation, but that is untrue. Your credit score can be changed and increased; it won’t happen overnight and most likely won’t happen right away, but it will rise with time if you are consistent and disciplined in your efforts.
Read More: Benefits Of Having A Good Credit Score