A poor credit rating is not just bad because it taints your creditworthiness but because it can affect your personal loan, mobile phone and other financial applications. Because of your poor credit score, you’ll likely get rejected for your application. This is why it’s better to face the music as soon as possible so you can work on improving your credit rating.
If you’re ready to make changes and you’re committed to improving your credit score, here are some things you can do:
Check your credit files
Before anything else, you need to get a free credit check report so you can check your credit files for errors or any discrepancy. It rarely happens but it’s always better to be sure than sorry. If you spot any error, report it immediately to respective credit agencies to have it fixed. A fixed error can do wonders to your credit rating fast.
Start paying your bills on time
Your credit score is 30% your payment history. When you’ve missed payments for mortgage, credit cards or personal loans, these will be recorded on your credit history. The hits can significantly affect your credit score, which is why it’s very important to pay your bills on or before their due dates. These bills including your utility bills, mobile phone monthly fees, credit cards and other liabilities that reports to credit agencies.
Pay off your debts
Just like your payment history, the amount you owe in debt also represents 30% of your credit score. If you want to boost your credit rating fast, one of the best tricks that have worked time and again is to reduce your debt. This means that you’ll need a plan on how to pay off your debts. Ideally, you’ll have to focus on the high interest debts first. This is so the interest rate doesn’t balloon up the amount of debt you owe over time.
Limit credit card charging
If you have credit cards, this is the best time to limit your credit card charges. This is also the best time to start paying those bills in full. Paying just the minimum of your credit card bill is a common mistake you don’t want to commit. If you want to pay your bill in full, you’ll either have to earn more money or you simply have to limit your usage. Ideally, you’ll have to keep the charges to below 30% of your credit card limit.
Request for a credit limit increase
Once your creditors see that you’ve been paying your credit balances in full, you may be eligible for a limit increase. This may sound counterintuitive but doing so will actually help boost your credit score. If your request is approved, credit agencies will notice your creditworthiness improvement. Just one reminder, if you do request for a limit increase, this doesn’t mean you should increase your spending. The same rule still applies. Keep your charges to below 30% of your credit limit.
Once the plan of improving your credit score is set into motion, the most important step you need to commit is to be consistent. Improving your credit score is not going to be easy especially during the first few months. You will not immediately see the results of your efforts. The same way that it took time for your credit score to go bad, it will take months for any improvement to take effect. You’ll just need to stick to the plan and basically be consistent with your payments and charges in order to see positive results.