Your credit score will have an impact on many different aspects of your life. It is used to determine whether or not you are eligible for loans and other credit products.
However, it doesn’t just affect borrowing. Your credit score might be checked if you apply for a job in a certain industry such as finance, for example, or if you want to rent a new home.
A poor credit score can stand in your way of achieving certain life goals, whether that’s purchasing a property, getting a job in finance or buying yourself something expensive. The good news is that there are several things that you can do to get back in control and start improving your credit score today.Â
Check Your Credit Score
Knowing and understanding your credit score is the first step to getting back in control of it. There are various free and paid services that you can use to look over your credit score and determine what is affecting it. You will be able to see what is bringing your score down and understand what to prioritize fixing first. It is also a good idea to check your credit score for any mistakes and errors that could be causing it to be lower than it should be. If you find an error, report it immediately to have it removed.
Repay Your Debts
When it comes to tips to improve credit scores, repaying your debts is one of the best things that you can do to see your score rise. Even if you have always been on time with making repayments and have not defaulted on any of your loans or credit cards in the past, your level of debt plays a part in how your credit score is determined. Paying off more than the minimum to bring the balance of your credit cards and loans down whenever you can will also help you improve your credit score.
Contact Your Creditors
If you are in a tricky financial situation and are struggling to make repayments on your debts, it is always better to contact your creditors sooner rather than later to avoid it having a large impact on your credit score.
Most creditors are happy to help when their customers are facing financial difficulty and you may find that the conversation is not as difficult as you anticipated. Getting an affordable repayment plan set up, for example, will usually have some impact on your credit score but not as much as missed payments or defaulting.
Use a Credit Card Wisely
If you have a credit card, how you use it can make a big difference to your credit score. If you’re actively looking to build your credit score, a credit card can be one of the best tools to help you do this. You can use it to make purchases like groceries or gas that you would normally buy, and pay off the balance in full each month for a positive credit record.
No matter where your credit score stands currently, there are several things that you can do to start building it.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
