Credit Score the Key Factor of Your Personal Finance

The recent economic problems that have hit every country have meant that households have often been faced with financial problems, often unemployment and sometimes repossession. No one saw the problems coming in an environment where real estate value was rising and credit easy to come by. As it turned out this complacency was soon shattered and with time, more and more people have begun getting confused with improving their credit scores.

As it is widely said, ‘Credit scores are determined by what’s in your credit report’.

While there continues to be demand for finance those who defaulted on any debt during recent years will only qualify for bad credit loans because those defaults hit the individual credit score by which the vast majority of applications are judged. Therefore, credit score improvement can be a challenging and confusing task for many.

A tad challenging, although pretty easy if you understand how your credit balances can help you improve credit score. The following are a few aspects that are considered highly important for credit score improvement:

# Contact third-party lenders online

There is money available with many internet lenders happy to look at individual cases and provide bad credit loans as long as the applicant can show how he or she will pay the monthly installments. That is primarily by proof of employment, earnings and recent bank checking account statements which will show recent credit history.

# Pay off bad loans immediately

Everyone’s aim must be to improve their credit score which can be done by paying off any bad credit loans promptly. As the credit score improves and it will improve not only by prompt but also of utility bills or store card payments, then the interest rate on any future borrowings, including possibly a mortgage will come down. Every percentage point on a large loan like a mortgage can mean a considerable difference in the repayments.

# Set-up auto reminders for payments

It is worth asking for details of a credit score; sometimes there are errors which can be removed if there is evidence that can be shown. One thing that must not happen in the future is late payment so setting up, or getting auto reminders of when payments are due is advisable. While an automatic payment of the minimum on a credit card avoids a default it is still poor money management just to do that and extra repayment should follow.

# Play it safe with credit cards

There is nothing wrong with credit cards used responsibly; even multiple cards but those which have a facility but are not used will be closed eventually by the credit card company and that can adversely affect a credit score because it may just be marked closed, and that can create uncertainty, therefore, be an unnecessary black mark. Using a fairly dormant card periodically helps. Always keep an eye out for your credit card balances. This will help you determine how much revolving credit you have as compared to the amount of credit you’re actually using.

# Pay your bills on time

While you’re juggling with the pile of bills on your desk, start worrying about the punctual payments of the same. No matter what, try not delaying bill payments at any cost. only go to improve credit score and make it easier for you to make larger investments and purchases in the future, such as mortgages, home, car, etc.

# Don’t risk it

Do not purchase anything or make any investment that might hint even the slightest amount of risk to you. In order to improve credit score, you need to stay wary of risky investments that might push you into a bigger bucket of credit defaults. Your aim should be to pay off all bad debts and loans that are already hovering over you, instead of playing it foolishly and making irrelevant and redundant investments.

Final words:

Some things can stubbornly stay part of the detail that calculates credit score for some time but other responsible financial activity that is current can gradually improve the credit score. When interest rates and approvals are so dependent on a credit score repairing any damage is very important particularly for someone young who may not have yet applied for their first mortgage.

A credit score is affected by the amount owed against the overall facility a person has. That means reducing debt while still maintaining a high facility, for example with credit card limits, will be favorably interpreted in a credit score. Bad credit loans can gradually become a thing of the past.

Stop obsessing and pay it safe with your credit facilities. Once you learn how to carefully use your credit cards and manage loans and investments, improving your credit score will be as easy as a breeze.

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