Looking to improve your credit score to get that loan? Read now!
Thinking of getting a loan but poor credit score is making you worry? Well, of course, it is a nail-biting situation. A lender will definitely take a look at your credit score as that will help them to assess how good you are on paying back your debts. A credit score that is anywhere between 551 and 565 is considered to be poor and if you fall in that category, you need to buckle up to improve the score in order to get that loan.
By following some tried and tested ways can help increase the chances for your credit score to quickly improve and help you get in getting your loan faster. Especially when applying for business loans, to have a good credit score counts as only then the chances for the loan to get sanctioned increases.
So take a look at the ways mentioned below that will answer your question about fixing your poor credit score rating:
1. Check your credit history
The first and foremost thing that you need to do is to check your credit history as that will help you to analyze the debts you owe, the money that you spent, and where you can control your expenditure so that you can carry out timely transactions in the future. Also, you must make it a habit to regularly check your credit scores as that will help you keep the score healthy. You can make timely decisions and also keep a check if there is any lapse in transactions from the bank side. It happens a lot that sometimes there is a delay in a transaction for no fault of yours. Keeping a check on one’s credit history ensures that all the transaction had happened just the way you intended. So yes, do not forget to keep an eye on your credit history.
2. Fix your late payments/pay bills on time
If you want to be consistent in maintaining your credit score rating, the best and a long term beneficial way is to pay bills on time and make sure that the payments are scheduled in time. It can happen that you scheduled a payment on time but the receiver did not receive the transaction due to a delay from the credit card company. If you keep check on transactions, you can trace out the delay or any lapse in paying your bills and clearing out debts in time.
A regular flow of money and transaction where the account has no outstanding bills or if you maintain a streak where you pay the bills without exceeding the last date, reflects on your credit score ratings. The ball is in your court, you can have an excellent credit score if you pay your bills on time.
3. Open New Credit Accounts Only when Needed
Now, this is a tricky one! Be careful when you open a new credit account because the purpose of it is not to use the money but to improve the score. Let’s understand how that works! You have a poor credit score where you owe a lot of money. You have yet to pay your debts, and because there are outstanding debts on your card where your credit limit is about to exceed, getting a new credit account and linking it with your old one will automatically increase the credit limit and your score will improve. So, if you have a card with a debt of $3000 on a credit limit of $5000, linking a new credit account will increase your credit limit, and the overall score will improve.
But do not forget its purpose, it can be tempting to use the money as now you will have the privilege of getting more money out, but in doing so, you will dig a deeper hole for yourself.
4. Become an authorized user on someone else account
A shortcut way to improve the credit score faster is to become an authorized user on someone else’s account who bears an exceptionally good credit score. It will reflect on your credit account as well in which the rating will change before the next monthly filing of the records by the bank, and your credit history will considerably improve.
So there are two options here, either you can ask your relative or a friend to help you out, or best still, get online and buy a credit score account. Yes, you can do that! You can purchase a tradeline in which your account will get linked to an exceptionally good tradeline, and your account score will improve. Over a couple of months, the tradeline will remove your account, and by then, it will have solved the purpose of your credit score rating. So you get enough time to improve the score and borrow money from a lender of your choice.
5. Raise your credit limits
Have you tried raising your credit limits? You must have heard about this one for sure. If you are doubting and are of the view that it will have little to no effect, you need to get the facts straight. Raising your credit limit gives enough weightage that can be enough to raise one’s credit rating.
For someone who has a credit limit of $5000, keeping in view of the debt that you have, your credit company can possibly increase it to $7000 to $8000. But, it depends on how good your credit has been in the past. The bank will increase the limit on seeing if you have been consistent in paying your debts.
Nonetheless, in most cases, the banks readily increase the limit as that benefits them too. If the customer spends more, the bank makes money from the interest rates, so most likely, your credit limit will be increased.
But again, you got to keep in mind that raising the credit limit is for improving the score and not for using that money. If you cannot control your expenditure, do not go for this option.
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