If you are shopping around for a loan or new credit card, you need a shining credit rating. A credit rating is what lenders use to determine whether or not you’ll be able to repay the loan on time. To create your credit score, institutes look at your history of spending, borrowing and repaying. The better you are at managing your finances, the more likely you are to be given a loan. But even if your financial status has been a bit messy over the years, there are still things you can do to improve your overall score. Here are four important steps to get the lenders on your side.
Show lenders how reliable your are
How to improve credit score? Borrow money, but be sure to pay it back on time. Even if you have never been in the red before, never having lent any money could be a bad sign for lenders. They won’t be able to see a pattern in your repayment habits, something they need to know so they can be sure you are good at paying loans back. You don’t need to prove this by taking out huge loans, though. One easy way to do this is to start a credit card. Just buy one inexpensive item on your card each month, and pay it off in time. If creditors see regular repayments, they’ll trust your more with your loan.
Shut down bank accounts you no longer use
This point counts for old credit cards as well. If you aren’t using them, it means you don’t need them. There’s no point holding onto idle bank accounts and credit cards – you may even be paying unnecessary fees for keeping them open. Not only will closing these accounts help your credit rating, but it will also keep you safer from fraud and financial scams. Now that you have fewer cards and accounts to look after, you’ll be better equipped to manage your finances.
Give the lenders what they want
If lenders see certain information on your application, they’ll look more favourably on you. All banking institutes like to see people with a good employment history. You’ll be in good stead to get the loan if you can prove you’ve been in long-term employment. A long-term home is also an excellent sign to lenders, especially if you own rather than rent. One red light to beware of: having a landline phone looks much better on an application than just a mobile number.
Double check for mistakes
As soon as a lender sees a mistake on your application form, they are less likely to give you the loan. Re-read and double check all your papers before you give in. If possible, it’s a good idea to get a friend or family member to read over what you’ve written. If you apply online, use a spell checker app to help you find any typos.
Now that you have this handy guide, you’ll find your credit score improve in no time at all!