Your credit score plays the most significant role in affecting loan approvals. It tells lenders how credible you are when it comes to paying off your debts.
Many online service providers let you check your credit score for free. You should check your credit score before applying for any more loans.
A low credit score means that you probably missed payments or defaulted on loans in the past. As a result, lenders will be more hesitant to approve you for any new loans.
If you find out that you have a low credit score, there are several ways for you to improve your credit score so that you can increase your odds of getting approved for future loans. You can also apply for bad credit loans.
Below are the top 7 ways to boost your credit score.
The first step to boost your credit score is to make sure you do not miss any more monthly payments on your existing loans and credit cards.
You can assist in this effort by setting up autopay on all of these accounts. Autopay will automatically send a payment to your lender every month from your bank account or credit card.
It will ensure that you do not miss a payment.
Table of Contents
Request a Credit Increase
It might seem strange to request a credit increase if you want to pay off your debts. However, a credit increase can help you boost your credit score because it will decrease the percentage of credit utilisation on your debt accounts.
Just make sure you do not spend that additional credit because it will defeat the purpose of increasing the limit. You will want to have more credit available and unused on your debt accounts.
If you keep spending money on credit while only paying the minimum monthly payment, then it will lower your credit score. So, it is better to make more significant monthly payments while keeping your available credit high.
Secured Credit Cards
If your credit score is so bad that you cannot get approved for a standard credit card, then think about applying for a secured credit card.
This is a particular type of credit card where you have to pay the credit limit upfront as collateral. Then you make monthly payments on the credit that you spend.
You can boost your credit score with a secured credit card significantly. Once you are ready to upgrade to a regular credit card, you can close your secured credit account and receive a refund on the money you paid initially.
Debt Consolidation Loan
If you have too many loan and credit card accounts that are open, then it is probably hurting your credit score. You can lower your score by paying off all these debt accounts with a debt consolidation loan.
A debt consolidation loan lets you combine all of your debts into one account. It pays off your other lenders so that you only have one lender to pay each month. This will make your credit report look much better.
Establish a Balance Alert
Your credit utilisation percentage should be under 30%. You may not always realise when you have reached 30% credit utilisation.
So, what you can do is set up a balance alert notification on your debt accounts. What this will do is notify you via text message or email whenever your credit balance has reached 30% of your maximum limit.
For instance, if your maximum credit limit is $20,000 and you have spent $6,000 of that credit, then you will receive an alert to warn you about it.
Pay More Than the Minimum Premium Amount
You may think that paying the minimum monthly premium amount on your loans will be good for your credit score, but it is not. You can build a higher credit score by paying more than the minimum amount, especially when it comes to credit cards.
Budget Your Money
Most people accumulate debt because they do not budget their money or credit properly. They will whip out their credit card and make purchases without thinking about the debt they are accumulating. Do not follow this pattern.
Make a monthly budget so that you know where all your money and credit are being spent on. Do not purchase anything that you do not need or that is not on your budget sheet. This will help you stay within your credit limits.
Image Pexels License CCO
Redundant. Unused credit and available credit have the same meaning. If you think otherwise, you may enlighten me further.
you can improve your score? Let me know if we have the same view on this.