Everyone wants an excellent credit score on their credit report so that they can obtain credit when they need it most for personal and business purposes.
Credit scoring takes years of your past credit repayment history to build, and if you have paid all your repayments on time, it is likely that your credit score will remain on top. However, there are still a few aspects that could jeopardise your credit score, even if you have never missed a repayment.
It may be due to factors that can be resolved easily. It may be due to incorrect credit report entries by creditors, which need a “Notice of Correction.”
If you need to boost your credit score, it won’t happen overnight.
But there are some steps you can take now to start on the path to better credit.
I believe the following points will help to maintain excellent credit scoring.
Monitor your credit card usage and affordability to repay on time
One main factor in your credit score is how much recurring credit you have versus how much you’re using. The smaller that percentage is, the better it is for your credit rating.
You should be careful if your credit card balance goes beyond your one-month net salary/income, as it may be difficult for you to repay your credit card balance in good time.
To boost your score, “Pay your credit card balance in full. Do not make the minimum payment every month.” A credit card balance can get you into financial difficulty and mental stress.
If you have multiple credit card balances, consolidating them with a low-interest loan could help your score.
What you might not know: Even if you pay balances in full every month, you still could have a higher utilisation ratio than you’d expect. That’s because some credit card companies use the balance on your statement as the one reported to the bureau (Credit Referral Agencies).
You may pay more than once a month to repay your credit card balance, so do not just wait for the monthly direct debit to go away; you may manually pay towards your credit card balance at any time in part payment instalments to clear your overall balance.
Reduce or clear your credit card balances
“A good way to improve your credit score is to eliminate your debt burden on the credit report.”
Your credit report is made of your ability to use credit and pay it all on time.
The solution to improving your credit score is to gather up all those credit cards with small balances and pay them off. Keep one or two credit cards for daily use so that you can maintain repayment on them easily and know how much credit you have used on your credit card.
“This way forward, you’re not polluting your credit report with a lot of balances”
Let old debt be on your report
Some people believe that old debt on their credit report is bad.
The minute they get their loan, credit card, or car paid off, they’re on the phone trying to get it removed from their credit report. It just takes away your history of repayment that you have made in the last many years. So let it be there if you have not missed any repayment on time.
Negative items are bad for your credit score, and most of them will disappear from your report after six years. which we call a “Default Notice”- A default notice is registered once for an account. If it has been re-listed again by the third-party collector on expiry, please contact them and get it removed.
Positive debt – debt that you have managed well and paid on time is beneficial to your credit. The longer your history of good debt is, the better it is for your score.
One of the ways to improve your credit score is to leave old debt and good accounts in good standing for as long as possible. This is also a good reason not to close old accounts where you’ve had a solid repayment record.
Do not apply many credit card accounts
Every time you apply for credit, it can cause a small dip in your credit score that lasts a year. That’s because if someone is making multiple credit applications, it usually means he or she wants to use more credit.
If you have applied for multiple credit cards via applications, your credit report will likely reflect all these searches, which may include unsuccessful credit card applications.
Pay bills on time
If you’re planning a major purchase (like a home or a car), you might be scrambling to assemble one big chunk of cash.
While you’re juggling bills, you don’t want to start paying bills late. Even if you’re sitting on a pile of savings, a drop in your score could scuttle that dream deal.
One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.
Credit scores are determined by what’s on your credit report. If you’re bad about paying your bills or paying them on time, it damages your credit and hurts your credit score so be careful.
Don’t hint at risk
Sometimes, one of the best ways to improve your credit score is to not do something that could sink it.
Two of the main points are missing payments and suddenly paying less (or charging more) than you normally do.
Other changes that could scare your card issuer (but not necessarily hurt your credit score): taking cash advances or even using your cards at businesses that could indicate current or future money stress i.e. Pawnbroker and frequent credit card used at the casino.
Be Attentive to your credit report
You should be focused on your credit score when you know you’ll soon need credit. In the interim, pay your bills and use credit responsibly. Your score will reflect these smart spending behaviours.
If you are denied credit (or don’t qualify for the lender’s best rate), the lender has to show you the credit score it used, another smart move is to regularly check your credit score.
The creditor will suggest the credit rating company it has used to carry out searches on your credit report.
You’re entitled to one of each of your three credit bureau reports (Equifax, Experian, and Call Credit) for a minimal charge and with a 30-day free subscription.
If you need help with improving your credit score then, please get in touch with our expert for free appointments and personalized solutions to repair your credit report.
Rajnish Tyagi is an experienced and Cert DR qualified debt advisor at Acme Credit Consultants Ltd, Which specializes in offering suitable debt solutions to clients.
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