Credit history is one of the most important things when evaluating requesting a loan, lenders assess your ability to get it based on that. If your credit history is not good, it is likely that you will have serious difficulties obtaining a loan with a reasonable interest rate. However, credit scores do vary, so this is something you can improve if you work on it. Therefore, today we give you some tips so that you can improve it and thus obtain better loans.
Every financial decision you make can affect your credit score and consequently your ability to get a job, credit cards, even renting a property. Making good financial decisions helps lenders and businesses view you as low risk and thus increases your chances of getting higher credit limits and lower interest rates.
Before doing anything, it’s important to review your credit report. This is a detailed record of your credit history, including your loans, credit cards, and bills. By reviewing it, you make sure that all the information is accurate and there are no errors that affect your credit score. If you find them, be sure to dispute them with the credit bureau.
Paying your bills on time is one of the most important things to improve your credit history. Late payments can negatively affect your credit score and show up on your report for several years. If you have difficulties paying your bills on time, methodologizing the process by setting reminders or automating your payments can be of great help to avoid inconveniences.
Outstanding debt is another thing lenders consider when evaluating your ability to get a loan. If you have a lot of debt, especially with credit cards with outstanding balances, it can be difficult to obtain a loan. Try to reduce your debt by paying more than the minimum each month, or consider transferring your card balances to another card with a lower interest rate.
Establishing a deadline and budget to pay all your debts is the first step to successfully overcome the obstacle, as is communicating with all your creditors to agree on payment plans. Regarding the latter, you must be careful if they propose to “reduce” or “skip payments”, since it is always better to pay a small amount than not pay at all. Paying off delinquent accounts first and paying off debts with the highest interest rates later can help you save money.
Every time you request a loan, a query is made in your report. If you have a lot of requests, it can seem like you’re trying to ask for more than you’ll later be able to pay. If you limit the number of credit requests you make, requesting only when you really need it, you improve your history and therefore your opportunities.
Closing accounts helps to organize
While closing a credit account may seem like a way to reduce your debt, can have a negative impact on your credit history. Credit accounts that are kept open for a long time can help show that you are a responsible borrower. In addition, closing them can reduce your history or decrease your available credit and negatively impact your credit score. If you’ve had a credit account for a long time, consider keeping it open even if you don’t use it regularly.
If you have a credit card, use it responsibly. Don’t spend more than you you can pay and pay your balance on time every month. This can help demonstrate to lenders that you are a responsible borrower and can improve your credit history in the long run.
Researching and making comparisons between agencies allows you to get better services, rates and plans. Before you reveal your personal or financial information, make sure the agency is legitimate.
High credit scores mean borrowers enjoy lower interest rates and higher credit limits. It takes at least 6 months to improve your credit score, so it’s important to plan ahead if you want to buy a home, vehicle, or other major item.