There are a number of reasons why you might want to improve your credit rating, for example if you want a mortgage or you want to purchase a car on finance. Some finance providers will turn an individual with bad credit away, seeing them as an unreliable borrower.
#1 Ensure your credit score report is accurate
Check your credit file and make sure that all of your personal and contact details are correct. Just a small error has the potential to harm your rating. You should also check your credit report regularly to make sure there has been no activity recorded that you do not recognise. Fraud is rare but it could have a devastating impact on you credit score and should be wiped from your account immediately.
#2 Make payments on time
Obviously, it looks bad if you’re late in repaying your loans, and this will have a negative effect on your credit score. If your credit report shows that you have a history of missing payments, lenders will be warier of accepting you for a loan or finance. If you have trouble remembering to keep up with certain payments, set yourself reminders on your phone, a calendar or through your online credit union.
#3 Keep your credit accounts for a long time
As your accounts age, your credit score will improve, so long as they are managed sensibly. Although, avoid having additional accounts unless it is completely necessary, as it could become difficult to keep track of them and if you aren’t reliable in making your payments on time, your rating will plummet.
#4 Avoid becoming delinquent or defaulted
If you miss a certain number of payments, this can cause your account to become delinquent, and if you fail to repay the loan on the scheduled date, this can cause your account to be defaulted. A delinquent or defaulted account will look very bad on your report, and may deter some companies from lending to you.
#5 Prove that you’re not overly reliant on credit
By applying for multiple loans or credit cards, this can suggest that you are overly reliant. This presents you as a high-risk borrower. Try not to apply for more than one form of credit every three months and show that you are a trustworthy borrower who is capable of making repayments on time.
If you are still struggling to improve your credit score but you really want that dream car, don’t lose hope. There are lenders who will be willing to help you. Speak to an expert, like Smile Car Finance, a finance provider which specialises in helping people in tricky credit situations.