Improving your credit score is not as simple as it seems. You can’t turn around your credit score in just overnight. And if you are going to apply for a loan, you have to keep your credit score healthy.
To effectively improve your credit score, you have to do a few steps and be patient with the process. Here are a few ways to get your credit score better.
Pay your bills on time
If you love shopping with your credit card, you need to pay the bill in full on time. While just paying the minimum amount does not directly hurt your credit score, it can impact your debt-to-income ratio.
Since you are not paying your credit card bill in full, the interest charge will just increase. And this will tip off your debt utilization. The credit score also considers credit utilization. The more credit limit you are using, the worse it is for the credit score.
If you keep paying just the minimum, your balance will just grow rather than shrink.
Never default a loan
If you do not fulfill your loan contract, your defaulted loan will be included in your credit history. When you get a loan, it is best to plan your repayments carefully. Choose the most flexible term that fits your needs and financial capacity to pay.
In case that an emergency happens and you are unable to meet the due date, do not hesitate to tell your lender rather than ignoring the calls from the collectors. They may give you some options to help you out. This way you can avoid defaulting your loan.
Do not close credit cards with balances
If you already have unpaid balances in your credit cards, you will only make the situation worst by closing these cards.
If your cards get closed, your credit limit drops to $0 but your balance remains. Your debt level impacts your credit score and this will make your credit utilization 100%.
Apply for personal loans
There are registered lenders who still approve loans for people with bad credit. However, do not expect a high loanable amount. You can use this loan to increase your credit score by paying it on time. It will take a long time to make it better, but it will pay off.
Once your credit score is back on track, your creditworthiness will show that you are really for better loan deals. You can then apply for car loans or even home loans.