Money is the driving force to keep thing moving in life. That is the major reason why money is considered to be the most powerful asset and even the deadliest of all drugs because how it might harm you remains uncertain till the time you fall into the traps. Eventually, you realise that you are in a pool of debt, so much so that all your attempts to pay the interest amount for the principal payments consistently, month after month becomes impossible. This inability to pay the monthly instalments in turn affects your credit rating inversely. The moment your credit rating suffers, it in turn affects your ability to get credit or loan in the future.
If this sounds like a big problem, then allow us to give you some great news that will let you heave a sigh of relief. There are ways through which consumers can improve their credit score or even rebuild their existing bad score.
Brief About Credit Score
The credit score is the most important tool to determine the creditworthiness of the person by the financial lending institutions. The basic advantage of having a good credit score is the fact that it opens up options to have loans sanctioned easily.
The track record of payment history, the outstanding loan amount and the general indebtedness are all evaluated statistically by the well reputed credit bureaus. These are some of the most important factors that lending institutions take into consideration before deciding whether or not to lend you a particular some of money. Hopefully, this has given you a lot of clarity on the importance of maintaining a good credit score. So in case you are suffering from a bad credit score, there is no need to switch on the panic button, because we give you 3 pointers through which you can better or even rebuild your credit score.
- Pay More than the Minimum Payment– It is best to always pay more than the minimum requirement. The reason for emphasizing on this is because credit bureaus keep a tab on this on a regular basis. The amount of money you are paying on a monthly basis as well as the time span you are taking to pay off the debt plays an extremely crucial role. As luck would have it, there is no exact measurement to assess the kind of boost your credit score will have if you make the monthly payments on a regular basis but people are of the opinion that it will reap good results. There are innumerable factors responsible for accelerating your credit score, but the most important of the lot is the satisfying debts and payment on a regular monthly basis.
- Always Chalk Out a Plan– Many people fail to realise that in case they are somewhere lagging behind when it comes to paying the debt amount, it is not helping them at all. Having multiple small loans at hand implies that it is best to simply the loan repaying process by opting for a debt consolidation plan. However, it is important to note that the inability to pay within the scheduled time frame implies that it will have a bad impact on your credit debt consolidation loan type. That’s not all, it might lead to an increase in the interest amount that you pay. Therefore, it is always best to have a word with your lender and chalk out a clear cut plan that will make both ends meet and would also prove to be fruitful for both the parties.
- Shift from Credit to Debit Cards– Always remember that a credit card might make life easy but it is your biggest enemy for your credit score. A credit card always impacts and affects your credit score badly, therefore, it is best to always use the debit card. With the help of debit card, you deposit the money in your account and use it as when the need comes. However, with credit card, every time you use it, the credit bill gets racked up on a regular basis. Debit cards are also a great way to discipline your financial stability and you get into the mould of using that is available. The use of debit card reduces your scope to fall into any sort of debts and does not even disturb your credit history. For those who find it very difficult to keep a tab on their finances, the debit card seems to be their go to option. Whether you have the ability to manage your finances or not, using a credit card is never a good idea because this card is a doorway to get into all sorts of temptations those can be easily ignored or even overlooked.
These are some of the simple yet effective ways to improve your credit score and make life hassle free from the shackles of credit card.