Clever Credit – 5 Actionable Ways to Improve Your Credit Score

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Having a bad credit score can have a severe negative impact on your financial future, making it difficult to get approval for a mortgage or even a credit card. If you aren’t about to get an A+ rating, don’t despair. We have put together five steps that you can implement to take control of your finances.

Avoid High-Interest Loans

Paying your credit card in full each month can be beneficial in building a strong credit rating. However, if an unexpected expense crops up that’s you can’t afford to pay off straight away, high-interest rates can lead to a small debt quickly escalating into something more substantial and even harder to get rid of.

Short term loans with crippling interest rates if the debt isn’t paid on time, known as payday loans, can seem like the only option for some low-income earners. Once the due date slips past, they have a snowball effect. Fortunately, there is a growing number of safer payday loan alternatives emerging in the market. Look for small loan providers with low-interest rates and manageable repayment terms.

Pay Your Bills on Time

Paying your gas, water, electricity and phone bills on time every month will have a positive impact on your credit score. If you are more than 60 days behind on payment for these household expenses, this overdue payment will be recorded against your credit score for the next 5 years. If you are having trouble covering the cost of a bill, it is worth giving your provider a call to work out a payment plan. Most businesses have hardship officers whose job is to help you find a solution.

Limit Credit Enquiries

Every loan and credit card application you make is recorded against your credit score, and too many will have a detrimental effect. You should be mindful of every form you submit – don’t apply for multiple loans in the hope of being approved for one. And don’t be tempted by credit card offers. The more that you can minimize your credit inquiries, the better.

Lower Your Credit Card Limits

Having a card with a high credit limit “just in case” is a common error that people make. When it comes to credit, the limit is a crucial consideration, not just the debt against the card. If you have a $50,000 credit card limit because it makes you feel secure or because it looks good in your wallet (black AMEX anyone?), then you are chipping away at your credit score without spending a dime.

Consolidate Your Debt

A debt consolidation loan is specifically designed to give you one payment for all your loans, at a lower interest rate than you are currently paying. Because your credit score considers the quantity of debt that you owe compared to the amount that is available to you, if you take out a debt consolidation loan, pay off your debts immediately and do not spend any more money on those lines of credit, you will not only reduce your debt but also improve your credit score. This does require some element of self-control, so if you are worried that you don’t have what it takes, you are better to cut up the cards or close the accounts.

 You can check your credit score online for free. Start looking at your financial situation today and figure out how to improve it, and you can put yourself in a strong credit position before you apply for your next loan.





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