Getting a standard loan these days is next to impossible if you have a low credit rating. Your credit score is one of the primary factors that banks look at when determining whether or not they want to give you a loan. If your credit score is low, you can be certain that you will be rejected. Worst of all, getting rejected for a loan can damage your credit score even further, making getting a loan more difficult. Instead of applying for a loan over and over again and hoping that this time they approve you, there are several things you can do to boost your credit score.
The first thing you want to focus on is getting rid of anything that might be bringing your score down. Some things that might lower your credit score are: too much debt, missed payments, and abusing your credit card. If you have any loans out, you’ll want to try and lower them, or even erase them, as quickly as you can. Try to make larger payments each month so that you can pay the loan off faster and even save money on interest accumulation. Just as important as lowering your debt is making sure you pay everything on time. Missed payments, no matter what they are for or how late they are, will affect your credit score. If you have trouble remembering when bills are due, try writing it down on a calendar that you see every day, or set a reminder on your phone. Consistently making your payments on time is a sure way to make sure your credit score isn’t being damaged.
Another negative factor to avoid is using your credit card incorrectly. This means that you shouldn’t be spending to your credit limit each month, but also that you aren’t keeping the card hidden away. The key to successfully using your credit card is to spend a little bit on it each month, and then make sure you are paying it back on time. Another tip for your credit card is to not pay back the balance entirely each month. Credit agencies want to see that they can make a little bit of money from you, so by building up some interest on your credit debt, you can actually improve your score. Don’t go overboard with this, but a little balance left on your card at the end of each month won’t hurt.
Once you have gotten rid of any negative factors, you can try to add some positive ones. If you don’t have any credit cards, start by applying for some basic ones, like store credit cards. Pick a store that you shop at a lot so you can enjoy any benefits that come with it. If you don’t have that many bills under your name, consider applying for something like a mobile contract. This way you can begin to make payments on something each month. Credit scores are all about showing that you are financially responsible and know how to handle your money. By taking out loans, credit cards, or having more bills to pay, you show that you can handle a large responsibility. When you pay these things off on time and spend wisely, it will have a positive effect on your credit score.