When you swipe your card you might not be thinking about your creditors or how they will take your every transaction. So don’t mess up your credit score as it is one of the most significant aspects for availing a loan. Besides this you have to make sure to save your credit score at the time of your next purchase also. As it is the difference between receiving a loan approval and being rejected.
Over your lifetime, having a low credit score might cost you thousands of dollars. That's why it's critical to safeguard your credit and maintain a high score.
A high credit score boosts your chances of obtaining a loan or credit card, whereas a low score eliminates those prospects. Banks prefer not to offer loans or credit cards to those with low credit scores, because they don't trust them to handle their money responsibly. Here we will discuss some simple steps that will help you save your credit score, stay tuned with us!
What is a Credit Score?
A credit score is a unique number assigned to every individual based on a review of the credit report. In short, credit scores show a person's creditworthiness. A high credit score is indicative of good credit history and is preferred too.
In other words, a high credit score represents that the person has sound goodwill and can repay his debts on time, this results in availing of the loans faster. A credit score of an individual may lie between 300-900. Moreover, a score of more than 700 is considered good while below that is not preferred by banks. Data shows that loan applications for clients with scores of 750 and higher are approved frequently.
Ways to Increase the Credit Score
A credit score is something that we cannot ignore therefore it is always advisable to improve or save the credit score as it enables you to avail the loans quickly. Here we are describing some prime elements to save your credit score, have a look!
1. Make Timely Payments on Bills
Even if your credit score is not good then you need to be cautious and prompt in paying off your credit card bills and other utility bills on time so that your credit report does not reflect any major defaults.
To do this you can choose the online mode to pay your bills and if you are using a cheque for making the payments then make sure to drop the cheque a few days before the due date of the bill. This will guarantee prompt payments despite uncontrollable delays.
2. Avoid Giving Too Much Credit
These days it is quite common that we get phone calls from various banking and financial institutions which offer credit cards. Sometimes we also feel that owning multiple cards will make our life easier. Thanks to balance transfers and other card features as it has made our lives more financially flexible.
However, we do not understand that owning multiple cards reflects our eagerness to obtain more credit, which reduces our chances of doing so when it is necessary.
With this, having several cards makes it complex to track the due dates of payments as it increases the chances of default and late payment.
3. Smart Use of Credit Cards
Credit cards are the prime financial tool as they provide enough credit for our necessities and enable us to avail of exclusive benefits. For instance reward points and air miles.
Besides this, credit cards also allow us to roam cashless without worrying about stopping at any ATM. But all these benefits apply only if we use the cards wisely and smartly.
Going beyond the credit limit is not a good move for anyone. In the same way, closing the credit card suddenly is also not a good idea unless you obtain a NOC from the credit provider. So we have to use credit cards cautiously so that we can build a strong and sound credit score.
With this you should follow the apps to help reach your money goals as it helps you in savings and having a desired financial backup.
4. Avoid For Applying for Too Many Loans
When you apply for a loan from multiple banks then an inquiry is conducted. This shows that you are desperate for credit, the outcome of this is that more inquiries dip your credit score.
So a good way to improve your credit score is to keep the inquiries minimum and obtain a copy of your credit score personally. Once you know the score and assess that it is below the expectations, you have to be prepared to pay the higher rates on the loans.
Therefore in this case you have to seek out the banks that will lend you money at an affordable cost rather than approaching multiple banks.
5. Consolidate Debts
If you have several debts then you can use them to your advantage. For this, you can take out a debt consolidation loan from a bank or any credit union and can simply pay them off. In this way, you will have to make just one payment and keep in mind that if you have a lower rate of interest then only you can pay the loans faster.
Another way to consolidate the balances of credit cards is a balance transfer. We have often seen that some cards have a promotional period and they charge 0% interest on the balance of your card. However, the balance transfer fees can be between 3 to 5% of the amount.
6. Credit Utilization
It is another prime element for calculating credit scores. The amount of credit available to you versus how much you are using shows your dependency on credit money. It is suggested that you keep your credit utilization below 30%. Hence if you have multiple credit cards then keep an eye on how much money you are using on credit. With this, you should find a credit card issuer that accepts multiple payments in a month.
Thus having a sound credit score is an extreme need in today’s era as the financial parameters are set by this. Besides this to have financial stability you should know about personal wealth management as it can guide your financial planning.
A credit score does not improve overnight as it requires constant efforts to repair the credit report and improve it. Therefore you have to be patient and monitor the credit report, credit lines, and spending patterns and ensure the timely payment of debts. Eventually, it will help you boost your credit score and improve your credit worthiness.
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