How To Improve Your Credit Rating
Having a bad record at the credit rating can be a nightmare. Not only is it something that causes embarrassment, but it limits your financial possibilities. Imagine that you need money to repair the house or pay the tuition of your children, urgently. Or more importantly, for a medical emergency. With a bad reputation in the bureau, most likely you will not get the loan, and if you succeed with a financial one, it will be with very high interest rates.
But do not worry, there’s an arrangement. Repairing your credit history may be easier than you think if you are willing to do it is not very high. It is important that you regularize your situation also if you have plans to obtain larger credits in the future.
Secrets To Quickly Increase Your Credit Rating
Working hard to save up for a down payment on a large purchase, such as a house or a car, does not happen unless you have a high credit score to qualify for a loan with a low interest rate. If your score is not enough, and the right time to buy is now, there are secrets to improve your credit rating quickly.
- Pay On Time
Although it may sound obvious, the primary strategy to have a better credit rating is to pay on time . Because this guarantees that your credit history registers your level of responsibility before the assumed commitments.
In that sense, paying on time is linked to two basic factors:
That is, to the extent that the person has liquid resources available and is aware of the days in which he has to make the payments, then a dynamics of organization and automation of the balance of the commitments made is created.
For this we suggest you make a payment schedule , something we talked about in a previous entry, which outlines the entire month, day, weeks and fortnights. Where you can have an accurate overview of what you have to pay, how much you need and when you should do it.
So that you can organize your resources and thus have a better performance both in your personal finances, and in the management of your credit rating .
- Stay On Top Of Your Credit Rating
Knowledge is power and this comes from mastering relevant and necessary information. In that sense, the second thing that you must implement in your management strategy to improve your credit rating is to be aware of everything that happens with your credit .
In other words, know what is happening with the information you are supplying. And for that you must schedule to have some two or three annual verification reports. Where you see your behavior and identify any discrepancy that may exist.
Since there are times where your information, or is not updated on time, or for some reason has suffered some type of alternation, which usually does not favor you. And this, in some cases, can have repercussions of several years. It is for this reason that it is crucial to improve your credit rating that you know what is happening , and how credit bureaus are looking at you.
There are plans of these institutions where you can access a certain number of times for free, while others have to pay something minimal. Now, regardless of whether you are paying or not, if you are in a process where you need to have a good credit rating, it is prudent that you access these reports and see what you can amend so that businesses and financial institutions see you with good eyes.
- Keep Debt Levels In Check
As already mentioned, among the most relevant factors within the context of the credit bureaus is the level of indebtedness and the history of payments. Which represents, based on a particular company, more than 55% of the entire weight of the other factors. And we can extrapolate this reality to other institutions.
It is for this reason that you must keep debt levels in check. Do not assume debts that exceed your ability to pay, in the case of loans, and for the issue of credit cards, use it for specific matters and always having a credit limit below the income level and not exceeding 50 % of your monthly expenses
This way you will be in control of all your debt environment, with positive repercussions in all your money management.
- Eliminate Inaccurate Entries
If your credit score is low due to misinformation, deleting that entry in your credit report can increase your score immediately. Request a free copy of your credit score from each of the three main disclosure agencies: Experian, TransUnion and Equifax. Check that all the information about your story is accurate and up-to-date. Old negative information should not appear after seven years. In addition, a bankruptcy, which can lower your score significantly, should not remain on your credit report for more than 10 years, depending on the type presented. If you find an incorrect entry, send a written dispute to the creditor that included the item in your report and to the credit reporting office. Includes all relevant documentation to demonstrate why it should be eliminated. The result of the investigation will inform you if the entry in dispute is eliminated, and a new credit report will be issued in your name.
- Increase Credit Limits
Thirty percent of your credit score is based on the amounts you owe to your creditors. The balance ratio of the card that you owe to the allowed limit, which is known as your “usage coefficient”, plays an important role in determining your rating. Therefore, reducing the balance of your credit cards and increasing your limits will raise your score. If you are a responsible borrower and pay on time, ask the credit card companies for an increase in the limit. This should reduce your ratio quickly and increase your score.
- Pay Your Bills In Advance
Your payment history represents 35 percent of your credit score. If you have not been paying your bills on time, start doing it immediately. Delaying 30 days, even once, is reported to the credit agencies and negatively affects your score. To improve your score even more, pay your bills before the creditor sends your monthly report to the agency. This reduces your balance before it is reported, decreasing your utilization rate and increasing your score.
- Get A Secured Credit Card
If you made some financial mistakes and can not be approved for a traditional credit card, ask your bank to provide you with a secured card. Most credit cards are not linked to any type of guarantee, or are not guaranteed, and essentially you borrow the money from your card company every month until you pay your bill. However, the insured cards are linked to bank accounts in order to deposit the money before you can use the card. Some of these issuers will inform the credit agency if you used your entire limit or not. Make your purchases with only a small fraction of the amount of your deposit to increase your credit score as quickly as possible.
In today’s world the credit rating can be your best ally, or your worst enemy , because depending on what comes out in the credit report, some doors can be opened or closed. For this reason, it is crucial to establish strategies related to the good management of money, so that this represents being seen with good eyes before the commerce and the national bank.
For this we suggest you pay on time, be aware of what happens with your credit and maintain a level of debt, if necessary, within the parameters of your possibilities. So that you can have a performance according to your expectations and those of the banking and commercial standards of the society.