Your personal credit profile determines your ability to attain credit from a bank or other lending company. Credit scores are numbers between 350 and 800. The higher your personal credit rating, the easier it is to get a line of credit or a loan. You can achieve a better credit score. This involves learning smart ways to manage credit, and implementing what you learn into your daily life.
Credit vs. Debit Card
A low credit rating can result from overuse of credit cards and excessive debt. What you owe to your individual creditors account for 30 percent of your credit rating. Using less credit and more cash helps to lower debt and improves your rating. Instead of carrying credit cards, get into a habit of using cash for most purchases and pay for the items with your debit card. Debit cards tie into to your personal bank account, with funds automatically deducted with each swipe of your card. Make sure you have the cash available before using it.
Monthly Payments
Once you get out of the routine of pulling out your credit card for every purchase, start tackling your balances and pay off your debt. Using cash alleviates new charges. But to put a dent in your balances and remove debt, plan to make larger monthly payments to your creditors every month. Check your budget and see what you can afford. Start by doubling your minimum payments. As your finances improve, consistently add more money to each payment until the balance disappears. Paying off debt is a key to improving a credit score.
Late Payments vs. On Time Payments
Achieve a better credit score with timely payments to your credit card companies and lenders of your mortgage and auto loans. Payments contribute largely to your credit score. Rebuilding a low score requires acknowledging your due dates and paying creditors before the cutoff time. Several methods can help to improve your payment history. For starters, don't wait until the last minute to mail payments. Use online payment services, or arrange for creditors to withdraw monthly payments automatically from your bank account.
Provide Explanations
As you build your score and improve your credit history, consider updating your credit report with a comment or information explaining the reason(s) for a low score. This method doesn't fix a bad credit score. However, if you need to buy a car or acquire a new line of credit, having this information on your credit report may convince a lender or creditor to approve your application. Did you lose your job, or experience an illness or injury that stopped you from working? If so, include these reasons in your comment to help you acquire financing.
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