Credit scores assists in establishing a good credit history, so if you constantly leave your bills outstanding, and don’t take your credit dealings seriously, your credit score will eventually go down.
If you have credit, you must be responsible enough to repay what you owe, otherwise this will reflect in your credit report. Suppose now you have a low credit score; its time that you start improving or cleaning it up little by little. How will you do it? Consider the following tips:
1. Review your credit report on an annual basis. There are three credit-reporting agencies, so you must get a copy of your credit report from each agency. Check for any mistakes, and if you do find some, you must have it corrected. This will usually take about three months before the change can take effect. If you are planning to apply for a loan, you must do this ahead of time.
2. Start paying all your dues on time, and if you can afford it, always pay the bill in full. Don’t leave balances because this will greatly help in improving your score.
3. If you have a credit card, you may want to start paying your remaining balance until you've reached about 25% of the credit limit.
4. Credit insuring is important if you want to purchase a car. Having a car nowadays is important especially if you need to travel every now and then. Car dealers can help in arranging your finances. This is called repossession insurance. Though it can be expensive, it is one way to improve your credit score and secure vehicle loan.
5. Start applying for account overdraft if you have a current account. This means that you can issue a check more than what you actually have in your current account without getting extra charges. The excess amount will be reflected in your monthly bill. Banks report to credit agencies, so make sure that you pay your debt on time to have your credit score improved.
6. Join clubs which charges annual fees and those that report to credit bureaus. Just make sure that you meet all the club's requirements. Some clubs arrange for financing, and if you receive credit, pay your debt on time. This is also one way to improve your credit score.
If you follow the tips mentioned, you're on your way to repairing your credit report. Your credit score is your only way to getting finance on credit, so make sure that once you've improved it, stay on the right track and avoid getting bad debt again.
Maintaining a high credit score entails great responsibility and discipline. Start now, while you still have room for improvement, especially when getting your first home.