Establishing and maintaining a sound credit score provides several advantages. Whether you are preparing to buy your first home, pursuing an advanced degree, or starting a new business, a solid credit history is one of your greatest assets. Lenders look for borrowers who demonstrate responsibility. It is typically easier to get a better rate on a loan when you maintain an excellent track record. This being said, what happens when your credit ranking is below standard? Are there any measures you could take? The good news is yes, and the following five tips can help you improve your low credit rating.
One – Check your credit rating:
The best place to start is by checking your current credit rating, before applying for a new loan. By periodically checking your financial health, you can make sure there aren’t any errors and that your personal information is up-to-date. If there are errors, or if you’ve been denied credit, determine the reason and strive to correct the situation.
Two – Establish Residency:
Once you have registered to vote, lenders are able to check the electoral registry to verify your residential address. Maintaining consistent residency will demonstrate responsibility and reliability. As mentioned early, keep track of your credit report. Make sure that your mailing address is up to date. Credit Expert’s recent article in MSN money emphasizes, “watch out for unfamiliar or suspicious entries” as this could suggest the possibility of identity fraud.
Three – Stay within your credit limits:
If you aren’t able to pay the full amount of your bills, immediately consult with the lender to see if the terms can be modified. Making timely repayments and paying more than the minimum amount may serve to strengthen your credit rating. On the other hand, late and missed payments will remain on your report for six years, or more, influencing whether or not your loan request will be accepted.
Four – Avoid over-applying for credit:
“Search footprints” impact your credit rating. Every time a credit check is run, the inquiry remains on your records, potentially causing lenders to question your financial integrity. Instead, aim to make yourself look more stable as a lender.
Five – Check financial links:
Request that defunct links to other individuals, or former business partners, be severed once you are no longer financially connected to a partner or family member. For example, an ex-spouse, business partner, or adult child (previously covered by a loan that you backed) could impact your score. If former partnership links are not broken, future credit opportunities could be affected by a lack of financial responsibility on their part.
Remember, creditors want to determine that you are a trustworthy debtor. Your credit report provides a snapshot of your financial integrity. If the picture is less than perfect, there is no better time than now to begin improving your low credit rating!