Credit Score0

Credit score is a three-digit number used by the banks and lenders to determine your creditworthiness.

Lending is a business that is based on trust.

The lender will let you borrow cash and trust that you will repay with interest at a later date. However, there are still a number of people who fail to pay as agreed.

To lessen the loss, banks and other financing companies use a credit score to foresee if the borrower will be a good payer or not.

They request for your credit report which contains your previous credits and unpaid bills, bankruptcies, and civil liabilities.

The theory is: If you had a good payment habit in the past, you will probably still have in the future. How you handle your previous loans will be the same way you will be handling your future transactions.

What if it took you a year to settle your credit card debt? If you have a low credit score, you will have a hard time convincing banks and cash mart licensed money lenders to approve your loan application.

Here are ways to bring back life to your credit score.

Pay your bills on time

Lenders are not just interested in your credit history. They will also take note of how you have diligently paid your utility bills. The pay payments habit is a good predictor on how you will handle your payments in the future.

The best way to boosts your credit score is to pay your loan, credit cards and utility bills on time. Paying late will negatively impact your credit score. If you are not good with tracking due dates, you can opt for automatic payments or calendar reminders.

There is nothing you can do for your delinquent accounts now but to settle it a soon as possible. Your negative records will remain for seven years. It’s a good thing that its negative impact will decline after some time. Your older late payments have less impact than the recent ones.

Pay off your debt

Paying in-full can also help in making a healthy credit score. If you get a loan, make sure that you acquire it from a licensed money lender. Understandably, banks will most like decline the loans of those who have bad credits.

Money lenders, on the other hand still offer loans through at a lower amount. Always check the list of licensed moneylenders to verify if the lender has a legal registration. This will ensure that your good payments in full will be reported to the credit bureau and will be added on your credit report.

Paying your loan and credit card bills will show that you are now making positive changes with your payment habits.

Don’t apply for too many new credits

If you are planning to get a loan or a new credit card, it is best to plan it well. Every time you make a loan inquiry or credit card application, the lender/bank will request for your credit report from the credit bureau. This is called a “hard” inquiry on your credit score. Multiple hard pulls will bring down your credit score since lenders will think that you are desperate for credit.

But if you make multiple credit application in a period of 15 days, all of the inquiries will be considered as one hard pull.

Open new credit card accounts only when needed. Aside from the hard pull, your credit card application will make, it will also tempt you to spend more and fall into a credit card debt.

Do not cut your unused credit card

Your credit score is also affected by the length of your credit history. If you have been using a credit card for the last five years, then keep it with you and use it every once in a while. As long as it does not cost you too much cash such as the annual fee, then it is a smart move to just retain the card.

The longer the length of your history, the better it is for your credit score. If you close your account, you will lose part of your credit history and this will negatively impact your score.

Have a mix of credits

Your credit score also depends on the various type of credit that you have been using. It is not limited on your credit card. You also have to get installment loans, car loans or mortgages to help you diverse the credit you are using.

Once you get new payday loans, you have to practice good payment habits. Always pay your loans and bills on time to rebuild your credit score. Borrow only from the legitimate lenders to make sure that all your handwork will pay off. Doing these tips will not immediately increase your credit score. But not doing them will immediately decrease it more.