Are you looking to buy a car, or get onto the property ladder? Maybe even get your hands on the latest smartphone? While you’re considering your options and getting excited about your imminent purchase, you might not be thinking about your credit score. Yet yours may be the deciding factor in whether you can achieve your dream or not.
Even if you are aware of what a credit rating may do, you may not know exactly how you can boost yours. So, what can you do? Here are just some of the ways you can improve your credit rating — if you do these correctly.
Check your credit reports
Get hold of a copy of your credit reports and give it a check. This is essential: if there is an error, you should get it corrected as soon as possible by reporting it to the credit bureau.
There are three major credit bureaus, known as Equifax, Experian and TransUnion. Each one will have details on your credit history and have a credit score for you. A lender will then use this to assess how much of a risk you are as a borrower. Your credit score could vary as the credit bureaus will have different information about your credit history.
Manage your credit card use
A lender will have a look at how you use credit cards, i.e. the relationship between your monthly spending and credit limit. You may be seen as a higher risk if your use is too high: it should be less than 30% but is better to be less than 10%. So, if you have a credit limit of $10,000, for example, then try to spend less than $1,000 a month.
There are other things you can do, too. You could try to pay off your balance many times a month, or even set up automatic balance alerts so you can keep an eye on your credit use.
Consolidate your card debt with a loan
You can do something about your credit card debt if you have any. You could try to consolidate it with a loan that has a lower rate than your card, for instance. This may save interest expenses over the term.
A loan can also improve your score because it has a fixed repayment term. Using this instead of a credit card will lower your credit use and diversify debt types. You can redirect to BingoLoans to see if there are suitable loan options for you.
Find out how to manage your money
Having credit can be good for your finances when used correctly. Yet it can cause trouble if you take on more debt than you can afford, or you use credit to spend more than your income — this can be the biggest problem for your financial situation, no matter how much you earn.
So, get good at managing your money and begin a budget so you know where your money is going. This will help you to keep spending under control, plus boost your savings rate.
