If you wish to take out a loan, most banks and licensed moneylenders will look at your credit score to determine your loan eligibility. If you suffer from bad credit, chances are you will only be given a smaller loan, have to pay higher interest rates, or have your loan application rejected. What you can do, is improve your credit score.
To prevent yourself from getting stuck in a sticky situation with a low credit score, here are some tips to help you improve your credit score:
1. Avoid Applying For Several Loans At The Same Time
Applying for several loans at the same time will lower one’s credit score. This is because the ability of the borrower to make timely payments on all the loans will be in question. Lenders will hesitate to provide more credit to a borrower who already has several loans and credit cards, even if he or she has a good credit score.
2. Avoid Having A High Credit Card Balance
Ideally, one should maintain the credit card balance at less than one third of the credit limit. This will help the borrower’s credit rating to remain good because the outstanding balance is below the required threshold. You should ensure that before the end of each month, you have reduced the outstanding balance to less than thirty percent of the credit card limit.
3. Avoid Closing Older Credit Card Accounts
Closing previous credit card accounts is not advisable because it results in you having a shorter period of credit analysis. This will cause the credit score to go down. Keeping the previous credit card accounts open will help you maintain your good credit score.
4. Ensure Bills Are Paid On Time
You should ensure that all your bills on time. Apart from loans and credit card payments, utility bills should also be paid when due. This will maintain your good credit rating because if you begin to default, the credit score will go down.
Having a good credit score is a great benefit to anyone who is planning to apply for any type of credit. Those who already have a high score should be careful to maintain it so as to continue to access credit facilities conveniently.