Boost your score with these 3 simple tips

Credit Score tips

1 Make a financial plan 

In January, everyone makes lists of promises, from losing weight to saving money and taking a course. If one of your promises involves a loan, for example, you can start by looking at your credit score.

The bank that will lend you money will certainly consult your score to decide whether or not to release the money. Plan to increase your score and have a better chance of being approved.

Also, here at Finance Adx, we have a lot of simple tips about how to organize your finances. That way, you’ll know how much money you have to pay off your debts. We also have good tips on how to prepare for debt negotiation.

2 Pay your debts

To increase your score, paying your debts is essential. If you are in arrears, negotiate with creditors and pay them all off. That must be your priority.

Without this, you’ll hardly be able to change the way the market analyzes your registration.

But have you paid off your debts recently and your score still hasn’t gone up? Keep calm!

Paying and settling debts increases your score, but it takes time for your score to rise. There is no magic formula to increase your credit score fast.

Therefore, the sooner you pay off your bills and settle debts in your name, the better for your score. If someone says they have a way to instantly change the score, Beware! So, in the coming months, lenders will be able to reassess the risk of extending credit to you.

As you had debts and settled recently, now keep punctuality in the coming months. You need to show that your behavior has changed and that your punctuality is permanent.

3 Use your credit and pay your bills on time

No better strategy for improving your credit score than paying your bills on time. Payment history is one of the biggest factors in your credit score, and late payments can linger on your credit reports for a long period of time. 

Therefore, if there is a delay, contact the creditor to negotiate the debt. In addition, you can ask the creditor to remove the late payment information from the credit bureaus.

Even if the creditor doesn’t, it’s still worth paying off the overdue debt as soon as possible, as an unpaid debt hurts your score greatly. The impact of a late payment wears off over time, but too many delays can plummet your score.

If you can’t pay everything on time, prioritize your bills. Seek financial assistance, such as loans, so you don’t leave your debts active in credit protection systems. 

If you can, include all accounts in the direct debit. Just ask the electricity, telephone and gas companies. Today most companies now offer this facility. So you don’t run the risk of forgetting an account and having your name denied because of this carelessness.

Bonus tip: Do this using your credit card! Cash or debit card payments are not part of the credit score information, and therefore are not used to compose the score.

4 Avoid bad payer reputation

If you have unpaid debt, negotiate and it’ll increase your score. While a late payment can stay on your credit report for a long period of time, not having open debt is very good for your score. In addition, when renegotiating, you bear the increase in debt with interest.

Therefore, it’s also good that you have consumer accounts in your name, including water, electricity, landline, card purchases, loans, financing and installment plans. 

5 Is it possible to get financing even with a low score?

Yea! It’s difficult, but it’s possible. Of course, improving your score can help you get credit in the market. However, the decision to grant the credit always rests with the company you asked for.

Your score does not interfere in this decision, as each company has its own criteria and policies for doing business. In addition, companies can also use other information, such as the good relationship with them, in the credit analysis.

6 Don’t cancel credit cards

Getting a credit card and using it responsibly can be a great way to boost your score. That’s because when we pay our purchases in debit, the financial system cannot see how we spend our money, or that we pay on time. With a credit card, you have the opportunity to show that you are a good payer.

If you want to improve your score, be aware that canceling credit cards can lower your score, as it means you have less credit limit, as well as increasing the percentage of total credit usage you have. Keep your credit card and use it occasionally.

Another important detail is that the age of your credit history is very important for the score, and if you cancel a card, you will lose its history. However, if you still want to cancel a card, do it with the most recent ones.

7 Apply for credit in moderation

While having credit increases your score, applying for multiple credit cards in a short amount of time hurts your score, especially if you’re denied. Try to wait at least 3 months between requests.

In addition to the credit card, it’s interesting to have a mix with other financial products if possible. Whether it’s an overdraft on your bank account, financing or a loan, lenders like to see that you can manage multiple types of credit. Having installment accounts and revolving credit, such as loans and credit cards, can increase your credibility in the market.

8 Do not commit more than 30% of your total credit limit

One of the factors that are considered when calculating your credit score is the percentage used of your current credit limit. For example, if you have a $9,000 limit on your credit cards, don’t spend more than $3,000 on all of them per month.

If you are using your entire limit every month, this can be interpreted as a bad sign of high debt and can hurt your score. Be careful when taking on multiple purchases in installments and committing your card limit for too long.

A tip is, every now and then, to contact your card and check the possibility of a limit increase. Do this even if your current limit is enough for your consumption. It’s also possible for the bank to offer you a higher credit limit without you asking, never reject this offer! The higher your credit limit, the lower your usage percentage will be and this will count positively on your score.

Have good bank account products. Having and using these services will help to contribute positively to your credit score, in addition to making your day-to-day easier, avoiding queues at bank branches. 

If you’re concerned about the fees charged by banks, try one of the many digital accounts available on the market. Most of them do not charge anything for the simplest services

9 Never lend your credit card

All services that are contracted on your behalf such as water, electricity or telephone and all credit you contract as loans and financing, will reflect solely and exclusively on your credit Score even if you are not the service user.

If any relative or friend asks you to request any of these services, in the event of default or late payments, the only one affected will be you. Even within a family environment, this is something that can cause problems, so be careful and avoid it as much as possible.

10 Escape the scams

The internet is full of malicious people who promise to increase your credit score quickly and miraculously, upon payment. That does not exist! Do not believe in this type of “offer”. No bank or any other company can do this for a fee. The only person capable of raising your score is yourself, paying off your debts, clearing your name and adopting responsible financial habits.

Was this article useful for you? If so, share it with your friends so that together we can help more people! And don’t forget to keep following the Finance ADX blog to check out other financial education tips. 

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