If you have ever had a loan application declined, it is easy to assume that you are not good enough to access credit, or that you need to wait for times to get better. But you can do better than assume such a fatalistic attitude. You can take steps to improve your credit score. Your scores are based on measurable data, and there is a lot you can do to change this measurable data.
Review Your Credit Report
Your credit card debt is only part of what goes on your credit report. There is other information that is included in the report, for example, auto loan payments, mortgage payments, student loan repayments, and even electricity and gas bills. It is important to know what information is going on your credit report. Ask for a report from each of the three credit reporting bureaus and scrutinize what you are being scored on.
Follow up on All Payments
Paying a portion of your bills is better than not paying at all. A good example is your credit card payments. You are allowed to carry part of your monthly balance on to the next month, but there are penalties for doing so. As long as you keep making the minimum monthly payments, you are in good books with the creditors. But skipping monthly payments is what gets you into the bad books.
If you have several monthly payments to make but are cash-poor, it is important to note when the different payments are due. You can then prioritize these payments, allocating the minimum necessary. If you have near maxed out cards it is important to prioritize their payments. This is even more important if they are of higher limits. It would be better if you maintained a borrowing balance of $2,000 on a $10,000 card than having $1,000 on a $5,000 card. This is called credit utilization. Look at the cards that give you better credit utilization and prioritize.
Paying your bills on time is a big factor in your credit ratings. Paying your bills before or on time impacts positively on your ratings. You can ensure that this happens by setting up automatic payments. Your payments due will trigger on or before the payment. It is easy to do this – almost all credit facilities and subscriptions offer this feature. Keeping your credit ratings positive is very important as it enables quicker borrowing and access to higher amounts of funds when you need them.