Tips for correcting your credit score

Here are some ways to fix a bad credit score and get back on the road to better financial health.

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December 18, 2018

4 min read

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In today’s digitally driven lifestyle, the importance of having a good credit score cannot be overstated. These are the most important factors in your ability to obtain funds when needed at a favorable rate and can be a potential trader. or deal-breaker. This 3-digit number defines the creditworthiness of individuals and helps them access mortgage, personal, auto or educational loans. A low score indicates poor credit health and an irresponsible attitude towards managing their finances, marking a borrower as a risky bet for potential homeowners, insurers, lenders, and employers.

But if your credit rating is low, fear not! While creating good credit cannot happen overnight, there is always room for improvement. A credit score takes into account every aspect of one’s past financial behavior, not just present stocks. But here are a few ways to fix a bad credit score and get back on the road to better financial health:

Check Your Credit Report and Identify Score-Killers

To get started, analyze your credit report. This will help you identify the factors that are affecting your credit score. It will also help you create and deploy an action plan, as well as assess the impact of these interventions on your score over time.

Summarize your late payments and unpaid invoices

If you have loan NDEs or overdue credit card bills, try to pay them off immediately. One of the factors determining your credit score is payment history. If your financial history shows late payments, the scores are bound to be low. To be on the safe side, activate your payment alert and automatic debit feature to ensure that credit bills or IMEs are paid off according to the stipulated schedule. Also, always try to pay off the maximum amount owed on your credit card to keep the overdue amount low.

Another aspect that influences your credit score is the use of credit. The amount of credit you use versus the amount you have available determines your dependence on it. It is recommended that you only use up to 30 percent of the available credit. Even if you use multiple credit cards, do not exceed this percentage on one card and try to reduce the use of the rest of the cards.

A consistent repayment history on an old running credit card gives your lender extra comfort in addition to a good credit score. If you plan to close one of your credit card accounts, avoid closing your old cards. If you notice that any of your loan accounts and credit cards are not on your credit report, contact your bank to report them to the office. Loan records with a positive balance sheet are always welcome by lenders as a confirmation of your creditworthiness.

Low credit scores are the result of poorly planned finances. You don’t realize that applying for multiple credit cards and loans can lead to a risk of lowering your credit score and reducing your chances of getting a loan. If your loan application is rejected due to a poor credit rating, try working on a credit improvement plan before applying for a loan again. Negative entries in the past six months have a bigger impact on your credit score. So, if you ensure timely repayments on your checking accounts for a minimum period of 4-6 months before applying for a loan again, you may be able to improve your chances of getting a loan. You can also take out a small secured loan like a gold loan or a secured credit card and demonstrate your credit discipline by paying off those bad credit loans on a timely basis. Last, but not least, never borrow more than you need and can repay. Always estimate your budget and expenses over the life of the loan to make sure you have enough cash flow to meet your loan repayment commitments.

Creating and maintaining a strong credit history is more like a marathon than a 100-yard dash and takes hard work and persistence. It’s also important to understand that improving a credit score is a long term business, but worth it. Imagine a life where you don’t have to worry about your chances of getting credit when it’s needed to meet personal or business expenses. Since it is important to check your health regularly, it is just as important to check your financial health regularly to avoid stress and discomfort in your life.

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