You are not alone in worrying about your credit score! A bad credit score can affect your future capacity to receive loans and other funding, as well as the interest rates you’ll have to pay if you do get accepted.
You may be wondering what the drawbacks of adverse credit are.
Keep reading to learn nine easy ways to boost your credit score and avoid high-interest loans and loans that don’t go through.
1) Pay all bills on time
On-time payment is required for all credit, not just loans. It’s an excellent method to show responsible money management, essential for good credit. In addition to affecting your credit score, payment history accounts for 35% of the FICO score. So if you only accomplish one thing today, pay one bill on time and don’t miss another until the end of the year.
2) No fresh loan applications
Before looking around, applying for a home or vehicle loan shows lenders that you can manage many loans and won’t deplete your borrowing capacity instantly. If you already have many loans, wait until you pay off some of them before asking for additional.
3) Reduce debt
It is an expense. Good and bad debt exist. Good debt is utilized for college, a car, a home, or company launch fees. Credit cards and personal loans are examples of revolving debts with variable interest rates and fees that might harm your FICO ratings.
Reduce unnecessary purchases and rapidly pay off existing loans to enhance your credit score. These procedures will improve your FICO score and help you qualify for better credit rates (and hopefully lower monthly payments).
If you’re unsure where to start or what actions to take, I recommend slicing. This card allows you to convert your debt to Cost EMIs effortlessly.
4) Avoid getting new cards
It’s tempting to apply for new cards, and balance transfer offers to assist lower your monthly payments if you’re currently in debt. But getting new cards just worsens your problem.
Your chances of getting a new card are slim if you currently have several open credit lines, especially if you’re close to or at your current card’s limit. Your best approach is to pay down existing balances first, then attempt later to boost your FICO score.
Instead, utilize only one credit card with top perks. One such card is the Slice Super Card, which offers numerous bonuses and promotions online and offline shopping.
5) Don’t use more than 50% of available credit
Taking more than 50% of the total available credit limits will lower your overall credit score. It makes sense; if you’re utilizing close to or more than half of your available loan and credit lines, you’re likely overextending yourself and may not be able to keep up with payments.
In the event of a job loss or an emergency, you may be unable to repay loans and end up in debt or homeless. This is especially harmful if done regularly, as it shows a total lack of financial responsibility.
Avoid maxing out any loans or credit cards to boost your total credit score.
6) Do not open too many bank accounts quickly.
If you want a loan or a credit card, lenders scrutinize your credit history. Too many open accounts can harm your credit score.
If possible, only apply for one credit card or loan at a time. You can even call each of your providers before applying to let them know you’ll be opening an account soon. Slice allows you to pay with an EMI without a credit card and an actual credit card.
7) Stay on top
Keep track of your debt. Pay at least enough to avoid late fees and not let accounts go over 30 days.
If you have bad credit, set up payment reminders with yourself or others to ensure invoices are paid on time. Then, when you need cash fast, this will help reduce the amount sent to collectors.
8) Maintain a good mix of loans
One of the essential criteria is your overall debt-to-income ratio or total debt as a percentage of income. You can control that by limiting your other obligations outside mortgages.
Don’t make new purchases with plastic until at least one of your existing loans is paid off. A decent rule of thumb is that non-mortgage debt payments should not exceed 10% of monthly income. If they’re higher, consider paying down debt or increasing income before taking on a further obligation.
9) Keep track of all transactions
This is standard advice, yet it is true. Track all expenses on a spreadsheet, if not already. It is nothing fancy or intricate, just a way to track who paid you and what they paid for (and how much they paid).
Those entries will show you how much money enters and leaves your company. It will also help if you seek a small business loan or line of credit in the future. Consistency comes from the documentation. For example, the slice app consolidates all your debits and credits.