A good credit score will increase your chances of getting a loan approved. Credit Card companies and lenders check for the ‘credit-worthiness’ of borrowers before lending them money.
Your credit score needs to be more than 600 to qualify as good. Banks are willing to take the risk of lending you high amounts of money and offer better interest rates, but only if your credit report is sound.
You need to know your present scores before deciding to improve it. Most companies depend on FICO (Fair Isaac Company) before making complex financial decisions. FICO calculates your credit card scores, which can be obtained by paying an amount as fees. However, starting from 2011, you can get a free copy of your credit score.
Here are some simple ways to increase your credit score:
• Meet the deadlines for paying your bills. This is the most basic rule to a stable financial record. Late payments reflect badly on your credit history.
• Avoid balances on your credit card. If you have transferred your balance to another credit card, keep the first one open even if you don’t use it anymore.
• Minimise the amount of outstanding debts. Try to minimise the use of your credit cards. Make a list of all your debt accounts with the help of information provided by your credit report. Check statements or go online to determine the amount of debt you need to pay along with the interest. Make a plan to pay these debts and follow it strictly, giving more priority to debts with high interest rates and then followed by the low interest rate debts.
• Check for errors in your credit history. Typically, when two people have the same name, their credit card activities tend to mix up. However, it’s not easy to remove slips from the report. So be calm, patient and insistent.
• Be persistent; don’t give up on things if they are not moving fast. It takes time and attention to increase the credit score. There are no shortcuts.
• Remember, it is not the credit score that you rebuild, but the credit history. It takes years to make these changes happen and turn each negative entry into positive.
With a good credit score, you shall be able to get big loans sanctioned. You can apply for a home loan or other loans confidently when your credit score is satisfactory. It is better to go for a PPI policy with loans. For further details on its terms and conditions, you can get in touch with a PPI Claim back firm.
Maria R, a blogger and writer from United Kingdom. She shares many tips about finance in various blogs. Follow her at ppiclaimsmaria