If you’re thinking of taking out a loan sometime in the future, you’ll need a good credit score, that three-digit number lending institutions use to determine whether it’s safe to loan you money.
Without a high score, you’ll find it tough to get the needed funds.
That can be a problem because you never know when you might need an emergency loan, and while lending institutions like MaxLend can provide you with a personal loan, you’ll still need that good score to qualify.
Best Six ways to build your rating
#1. Pay Down Your Debts
One factor determining your credit rating is the amount you owe, so start making extra payments on your debt to pay it down.
Cut back on eating out. You’ll likely save enough each month to make a double payment on your debt. Pay off the smallest debt you owe first.
Then use the money you were paying on that debt to apply to the next bigger debt. Keep doing this until you’re debt-free.
#2. Pay Your Bills Automatically
It can be easy to forget to make those payments, and if they don’t arrive in a timely manner, your credit score will drop, so set it up so that those payments are taken out of your account automatically.
#3. Repay Your Student Debt
Interest is typically low for educational loans, and the government has been known to not enforce those payments, making it easy to get lax about your student debt.
Make it a point to pay off that debt as soon as you can. You’ll feel a great sense of relief that the debt is paid.
#4. Limit the Number of Credit Cards You Have
Any time you apply for a new credit card, your rating tends to drop, so avoid taking out too many credit cards.
Use one credit card for all of your online purchases and another one for those purchases you make in person. That way, you limit your risk of cyber scams and protect your credit rating.
#5. Pay off Your Credit Card Balance Every Month
The interest rates on credit cards tend to be high, so make it a practice to pay off the balance each month so that you won’t owe any interest on the items you charge.
Paying off your debt promptly is a good habit to get into and it’s doable if you limit the amount you charge. Keep tabs on how much you spend each month, and set a limit on your charges.
When you reach your cap, stop making purchases. You can always buy that sweater or chainsaw you wanted next month.
#6. Watch Your Credit Score
It’s a good idea to check your credit score rating every few months. That way, if your rating drops, you’ll find out right away and remedy it.
It’s also a good way to find out if someone has opened an account using your information. Building and maintaining your credit rating is a good way to guard your finances and have peace of mind for the future.
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