cote-creditMay 16, 2017

How to rebuild your credit score

Many people complain about their poor financial situation but do not understand how they ended up in it. Such a negative situation, without being controlled, can have a detrimental impact on your credit score and punish you when you try to borrow money from a bank. Fortunately, the credit score is not set in stone – with work, it can be improved. Here are a few tips to help you quickly increase your credit score.

Determine your debts and your budget

Making payments late has a very negative impact on your credit score, especially when a payment is 60, 90 or more days late. Even if your score has been good up to now, it can drop by almost a hundred points. That is why before applying for a loan or credit, it is crucial to settle any outstanding accounts that may exist. After all, it’s reasonable to suppose that no self-respecting bank will lend money to someone who cannot meet their financial obligations.

Some experts suggest that you need to have a credit score of at least 650 before making your initial application. This credit score number will make you eligible for most credit cards and loans, but we strongly recommend you to exceed this number as much as possible, as a better score will get you better interest rates.

Limit your balances and new credit applications

Try to bring your outstanding balances to below the 35 percent mark. By reducing your balances while you continue to use the credit, you build a history of credibility for your potential creditors in the future.

In addition, keep in mind that when you apply for new credit, the application plays a role and lowers your credit rating. Each time you make a new request, this effect is repeated. Thus, in order to avoid lowering your credit score excessively, space out your credit requests over time. This will allow for your score to recover and give you a better chance of getting loans in the future.

Old account advantage

Old bank accounts are similar to wine – they get better with age. That is not a joke! The older your (minimally active) bank account – the more it impacts your credit rating. Ensure that there is activity in the account, as the credit rating is based on the activity and not just the time since the account was opened. A good approach to take advantage of this is to make sporadic purchases using the account and then ensure that the bill is paid in full.

Finally, it is recommended that you meet with a financial advisor to look at the best ways to increase your credit score for your particular case.

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