Are you having a hard time applying for a loan? It may because your credit score is too low.
Banks and other similar, loan-giving companies are now more careful in lending their money. Their decision to grant or reject an application for loan is based on a person’s credit score. They are more inclined to grant a loan to someone with a high credit record.
So how exactly do you become that “someone with a high credit record”?
Follow these 8 ways to improve your credit score and increase your likely hood of getting a loan.
1. Check your credit history
You must first identify what your problem is…
First, you must check your history of loan and credit payments. Do you pay on time? Do you have any payments that are overdue? Keep in mind that any kind of late payment will hurt your credit score; Utility bills, parking tickets, cellphone bills, Library dues are a few samples.
…then, fix it.What do you do?
You pay your bills on time. A company you loaned from calls you; immediately respond or return the call as soon as possible. Prioritize the bills that have been overdue for the longest time, as these are the ones that can severely damage your credit score.
2. Lesser the better
Limit the number of credit cards you apply for. Applying for a lot of credit cards, in such a short amount of time, will decrease your credit score.
On the other hand, do not limit yourself to one credit card only. Why? Because you will be letting that one credit card handle all your debt. Maxing out your credit will also hurt your credit score.
3. Pay off your loans
No matter how small, you should always make sure to pay off your loans as soon as possible.
If lenders see that all you have a lot of active accounts, they will consider this as a negative on your credit score.
4. Cancel outdated credit cards
If you have any credit cards that you aren’t using, it’s best to cancel them. This is because the contracts within those outdated credit cards still appear on your file.
If you have any debts or overdue payments left in those credit cards it will add to your potential, total debt even if it is already null and void.
This may confuse lenders and they may become wary about giving you a loan. So terminate your outdated cards and make sure you include that information on your file. Cancelling outdated credit cards improve your score.
5. Double check your credit information
Even with the advancement of technology, there is still a potential for mistakes. This is why you have to make sure that your credit information is error-free.
Be sure that your personal information such as: your full name, address and contact number are correct. There have been cases of identity theft, because of similar names recorded on the database of a company.
Also double check to make sure that the company does not put debts where they shouldn’t be. Look for outdated information and replace it.
Remember that incorrect information may be seen as fraudulent and can be used against your credit score.
6. Build reputation
The best way to do this is by having and keeping a good credit record. If you have any unused accounts with a clean credit history, don’t close them. Having a long, positive credit history will be advantageous to you.
If you want lenders to trust your ability in managing credit, you must show them that this is true.
Creditors are business-people but the fact of the matter is, they are still people. They are not machines, they don’t view the world as only black-and-white. They can understand financial difficulties and problems.
So it’s up to you to inform your creditor of any problems you may encounter regarding loans and payments. Negotiate an acceptable resolution with your creditor.
If you become in good terms with the creditor he could reduce your minimum payment or maybe your interest. He may even extend the length of your loan.
8. Never miss a payment
One of the most simple yet undermined strategies of increasing your credit score. Always pay on time.
If possible, pay in advance as this will have a positive effect on your credit score.
Don’t ask for a loan that you’re not sure you can pay within the given deadline. Don’t take the risk.