Tips for improving credit score
Good Morning,
In today's newsletter, I will be sharing how you can improve your credit starting from today. A good credit score is highly beneficial, providing better possibilities for lower interest rates on credit cards and loans, as well as raising your borrowing capacity for loans.
Note: I am not a financial advisor and this is not financial advice.
Do Not Miss Payments
If needed, set up a Direct Debit to make the minimum monthly payment for any credit cards, although I would recommend you pay off any outstanding debt as soon as possible. Missing payments or making them late is a bad sign for credit card/loan providers, lowering your chances of being approved.
2. Avoid Withdrawing Cash From Your Credit Card(s)
It is noted on your credit reports when you withdraw cash from your credit card. This would lead lenders to question whether you are able to pay the money back, as withdrawing cash indicates that you are struggling to live within your means.
3. Keep Your Credit Utilisation Low
Your Credit Utilisation Rate is the percentage of your available revolving credit that you are using. For example, if I am using £500 of an available £5000, my credit utilisation rate is 10%. A low utilisation rate is attractive to lenders, as this suggests that you do not rely on the credit loaned to you. Keeping this low (under 30%) is one of the easiest ways to raise and maintain your credit score.
4. Credit Builder Cards
A credit builder card is designed for those with bad credit or little-to-no credit history. These are perfect for young people looking for a first credit card - offering low limits and higher acceptance rates. One can utilise these cards by spending small amounts that you can pay off in full at the end of each month. This will build up your credit score, unlocking more opportunities. Although this is a great way to build your credit score, I would recommend keeping your spending at a level you are comfortable with paying back in full, as credit builder cards tend to have higher APRs.
"Money talks - but credit has an echo" ~ Bob Thaves.
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Written by @getitdone43