Before you apply for the current account that you choose, you should try to improve your credit a little, especially if you are in the risk zone.
Getting better credit is simply part of the process of reaching all of your financial goals. It’s not that you can’t get things with bad credit, only that they tend to cost you a lot more than if you had good credit.
This is because in the eyes of most lenders, it’s really all about risks They’re going to be giving you quite a bit of money, and they want to make sure that they honestly get their money back with interest.
So if you have bad credit, then they are concerned that you honestly will not pay back the loan. So your interest rate is higher since they really are taking a literal risk on you. So how do you really improve your credit score? There are five top ways to do that, and they are listed below.
1. Mix it Up! Don’t just go with credit cards — if you need to get an installment loan to purchase furniture, this is something that you need to consider in terms of improving your credit score. Lenders want to see that you can work with a wide variety of different credit types, as that will really make sure that you actually improve over time. Your score will go up if you have more than just one credit type.
2. Pay On Time This is one of the most important things you can do in order to improve your credit score. You have to make sure that you are paying absolutely everything on time — not just the credit card in question. If you pay one credit card on time but you are late on everything else, your credit card company can still raise your rates. This is covered under what is normally referred to as a universal default clause. If you are mailing in your payments, make sure that you pay early — there is really nothing wrong with paying in advance. This will only help your credit score grow over time as you can’t be held late.
3. Watch Utilization! Many credit card users tend to run up their bills all the way, often skirting the limit or even going over it. This hurts your credit score, as lenders get nervous that you’re basically borrowing a bunch of money that you have no actual thought to repay.
4. Pay Down Credit Cards Paying down your credit cards is always a great way to improve your score. You really have to make sure that you’re not carrying super high limits on everything. As mentioned in the last tip, it really does make lenders worry that you’re preparing to run. Paying off credit cards can also be done with those bonuses that you get throughout the year. For example, if you are looking forward to a tax refund, you can apply some or all of it to your current credit card bills. This will also lower the total amount that’s going to the interest rather than the principal.
5. Watch those Inquiries! An inquiry shows up on your credit report any time that you actually go to apply for credit. This is different from the inquiries that you make pulling up your own credit report. Some people find that they really do best when they are looking more at their credit because then they can spot errors.
But when you are applying for too much credit at once, lenders get nervous that something may have changed in your life to the point where you might have gotten desperate. Overall, these five tips are only the beginning. You will need to really get serious about your credit if you honestly want to have the type of credit score that really gets lenders to take notice of you and give you the best rates around. Get started today for the best results!