If you find yourself in a spot of below average credit and you’re looking for ways to improve your credit score, remember, bad credit is unfortunate but it is not a credit death row sentence. Many people with less-than-textbook credit scores have rebuilt their credit and brought their scores back to normal if not above average by utilising different tactics.
It is essential to maintain a level of financial stability in life, with a good credit rating, it is easier to meet your financial commitments and you develop into a more eligible prospect for lenders. A good credit score is what we all aim for; it is one of the chief determining factors when it comes to borrowing money, and getting a low-interest rate when we do. The health of your credit score is determined throughout your banking history and is an indication of the amount of risk a creditor is taking by granting you a loan. Clearly, the better your score, the more likely you are to get a loan. Despite the rate increases due to our country’s rising inflation rate and your pockets being stretched, it is possible to manage your debt successfully and work towards an improved credit score. Read on for 3 powerful tips to regain a steadily growing credit score:
- Pay more than the monthly minimum. Paying on time is the most vital part of a good credit score. Your payment history amounts to a big portion of your score and one late payment has a significant impact. When you receive your credit card statement, a due date and minimum payment is indicated. Do your best to pay a bit extra on your instalments, it makes little impression on the total owed if you regularly only pay the minimum amount. Most credit card providers see this as a sign of distress and may reduce your future access to credit.
- Close pointless lines of credit. Simply put, if you’re not using it, lose it. Reassess your monthly spend, if you see there are items you can cut down on such as retail accounts not in use, reduce your credit limits accordingly. This will be favourable for your debt to credit ratio and the fewer lines of credit you have, the less risky you appear to creditors. Your debt to credit ratio is the difference between what you owe, combined with your credit limit, the bigger this gap, the better.
- Check your status. In South Africa, you are entitled to one free credit report per year after which additional reports can be obtained at a small fee. Check your credit records at all credit bureaus and ensure that your information is correct and up to date. Also keep credit enquiries to a minimum and far in between, as every enquiry is recorded on your credit history. Only make an enquiry when absolutely necessary.
If you need assistance in getting back on track, or you find it difficult to meet your minimum payments, don’t hesitate to contact your bank to discuss possible relief options, your bank is there to assist you, and so are we here at Fincheck.