In today’s massively connected world, credit ratings and reports have become more important than ever and can affect not just your ability to borrow but also the rate at which you’ll be charged. Not so very long ago, a lender’s choice of whether to lend you money was based mostly on guesswork, but credit reports are now widely used by all lending institutions and a poor rating could see you getting knocked back time and time again.
Even if you accrued a bad rating accidentally, it can often seem a near-impossible task trying to regain those precious points again and get yourself back on track. However, all is not lost and there are tried-and-tested methods that will have a positive impact on your rating.
In each case listed below, you should check your credit rating regularly to monitor the impact of each of these steps. For example, with a company like Command Credit. Partnering with Experian, Trans Union, and Equifax, Command Credit makes it easy for you to access consumer credit reports.
Increase your credit limit
While it might sound a little counter-intuitive to increase your available credit when you’re trying to improve your overall rating, actually, having a higher limit but not using it will have the background effect of reducing your credit utilization score. Unfortunately, in some cases, this might not be an option, but there are two main ways you could try to increase your limit:
- Approach another lender and take out a loan
- Speak to your current lender and ask for an increase to your limit
However, it’s extremely important to remember this tactic will only work if you resist the temptation to stray into your extra available credit. The additional limit should be used purely for improving your credit utilization score i.e. don’t go immediately maxing out the extra limit.
Pay off or pay down repeat balances
It should go without saying the best way to avoid a bad credit rating is to keep debts as low as possible and pay them off quickly. However, again, this isn’t always possible in all cases, but you should at least make sure you pay your monthly agreed payment on time – and overpay where possible.
As a general rule, the quicker you pay down on debts (and make extra payments), the faster your score will improve. Better yet, if you’re in a position to clear debts, you’ll see improvements much quicker. Incidentally, if you feel your credit rating isn’t changing quickly enough after making these payments, you should also check with your creditor to see how regularly they update relevant credit bureaus (most are monthly, but they all vary).
Don’t just assume your credit report is accurate
It’s estimated around 25% of Americans have errors on their credit report – anything from fraudulent accounts to errors in payment reporting. Just like you should check your credit card and bank statements every month, you should carefully look over your credit report for any potential errors. Should you find anything amiss, you should contest it. Also, if you subsequently win your case, you may improve your rating by way of knock-on effect.
