Bad Credit doesn’t just sound bad on paper, it can also cost you thousands of dollars in your life. A bad credit score instantly diminishes your chances of getting a loan or even a credit card. It also increases the value of premium for your future loans and decreases the loan limit (although, you will still be able to get a loan, and you can find out more information at kingofkash.com about the loans they provide to those with bad credit). It can even also cost you a new home or potential job. As we are moving towards going paperless in the financial world, your credit score heavily affects your financial position.
A Credit Score can follow you like a ghost of a bad past. But luckily, there are ways you can improve your credit score. If you have bad credit but you still need a cash advance that you are finding hard to get, then you can look into Texas installment loans for bad credit that are available online at websites like lassoloans.com so you are covered when you need it the most. You can read on about what to do when you need to better your credit score.
9 Ways to Improve Your Credit Score
Your credit score is the history of your past financial decisions. You can’t correct undo those pats decisions in a few days, but if you want to improve your future financial position, here are some steps that you can take:
Keep A Check On Your Credit Reports
You might not know it, but you have three credit reports. These are maintained by the three major credit bureaus- Equifax, Experian, and TransUnion. You’d be surprised to know that chances of an error on your credit report are quite common.
It’s the most frequent complain the Consumer Financial Protection Bureau (CFPB) receives. In fact, the Federal Trade Commission wrote a report in 2012 saying that 1 out of 5 consumers had a mistake on their reports. 5% of these Americans had problems in getting credit later on.
How do you correct that?
Request a free copy of your credit report from all three credit bureaus every year. Check for discrepancies in the report. Look at everything closely. If you find an error in any report, you can initiate a dispute with the relevant bureau to correct it.
Years of Credit Experience
Credit Experience allows your creditors to observe your past behavior and hopefully predict your future credit behavior. A good credit history is more than 5 years. If you have a short credit experience, you can’t do anything about it. The only thing to do here is to wait for your credit experience to improve with your credit score.
You could also ask your parents or your spouse to add you as an authorized user. This might be tricky since the person who authorizes you is held responsible for your loans.
Don’t Remove The Good Old Debts
A Bad debt is bad. There’s no argument about that. But, if you have successfully paid off a mortgage or a personal loan, don’t try to get it removed. Most people wrongly assume that getting old debt removed from their credit report will help your credit history.
On the contrary, it helps you. It shows that you paid your debt and can be relied on for more loans. You want your creditors to know that you have a history of paying off your loans. It’s a good debt. It reflects well on your credit score.
Get A Credit Card
This may sound surprising to you but a credit card actually helps your credit score. When you have a credit card, you have a credit history. It helps your creditors gauge your credit position.
Having said that, it’s also very important to make sure you use your credit card responsibly. Make payments on time and don’t misuse your credit card.
Keep Credit Utilization Ratio Below 30%
You might have a credit card with an unbelievable credit limit. That doesn’t mean you have to max your card limit. Ideally, you should try to keep the credit to less than 30% of your credit limits. When it goes above that, your credit score will go down. It’s going to happen even if you pay off your full balance later on.
Pay Bills on Time
I would say this is pretty obvious. Pay your credit bills on time. When your salary hits your account, the first thing you should do is put away the money you owe to your creditors.
Even your monthly utility bills can reflect on your credit score. This happens when the utility company sends off the defaulted payment to a collection agency, such as the Collection Bureau of America or in whichever location you reside. This then goes into your credit report.
Paying on time will help your financial reputation and thus your credit score. If you have problems keeping track of your payment, create a schedule. Put it up on your calendar. Or better yet, set up automated payment systems.
Deal With Late Payments Instantly
Late Payments happen all the time. You were in a crunch, or you just forgot about it. But that doesn’t mean you have to keep them on your credit history. Late Payments go into your credit history 30 days after you deflect on your payment.
Most people don’t know that they can remove a late payment report from their credit score. It doesn’t require you to chase your credit card company. This guide will help you find the best way to remove the late payment report, depending on your situation.