Dan Pencer

5 Need to Know Tips to Improve Your Credit Score

I know. Obtaining a loan can be a very daunting activity, especially when you have a bad credit history. Therefore, you need to continuously improve and maintain your credit score for times you’ll need a loan, whether for a business or to pay off severe debts. Fortunately, with the introduction of the National Credit Act, you have the right to get an updated credit report annually, and the best part about it is that it is free! All you must do is utilize this free online service through a registered credit bureau, and you’re good to go!

What could be better than this?

It is highly essential that you know and improve your credit score consistently, as a poor credit history will seriously delay the process of applying for a long-term loan, whether for business financing or for a home loan. You may even get rejected right away. Check your credit status at least once a year and resolve whatever issue you may have with your credit history, especially if there are red flags on your record. One of the key things to ensure is that your payment history shows repayments that were made regularly and on time. No one would give you a loan if you are not up-to-date with your payments.

Want to improve your credit score? Here are five tips that would help:

1. Use cash more often: Ensure that you use cash as often as possible. Avoid using a credit on unessential items. Close credit accounts that are not in use but are fully paid, as retail debts could have a negative effect on your credit history. Also, do not use a single credit card to settle the debt of another card. Most people think they are paying off debt, but they are only delaying repayment which will accumulate interests in the long run.

2. Pay above your monthly installment amount: doing this when possible will reflect positively on your credit history, which will increase your chances of getting a loan faster.

3. Reach out to your credit provider: Asides from reviewing your credit health periodically, also ensure that you take note of outstanding debts and pay off as fast as possible. Whenever you have issues paying off your debt, ensure you reach out to your credit provider immediately, as they have access to your financial information.

4. Strike the balance between good and bad debt: Not all debts are the same, and the sooner you are able to differentiate between good and bad debts, the better. Good debts are often made when money is borrowed to generate wealth or for a good cause like funding a business or student loan. Bad debts often result from money accumulated from impulse buying, like the purchase of basic items like groceries with a credit card. Often, it is very difficult to afford the repayments, therefore the interest keeps piling up. To solve this, budget a weekly or monthly cash allowance for such expenses.

5. Talk to a financial adviser: Reaching out to a financial adviser will help you create a financial plan to enable you to maintain a healthy credit and manage your money properly.

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