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Battling the uncertain future might be quite challenging to many especially when the pay does not cover all your financial needs and this can affect your credit score significantly. In most cases, you are likely to have less money for precautionary purposes and hence being vulnerable to loans that affects your credit score.
Despite the dares of meeting your current financial obligations, the need to maintain your crediting ratings and score becomes imperative for individuals who always find it easy to finance their activities through loans. Your creditworthiness is determined by the information maintained by different credit rating agencies and has a vital role to play in determining whether creditors will offer you a loan.
Frequently, your credit score report is dynamic and changes regularly. Therefore, the credit score can change even if your financial habits have not changed over time. There are a number of factors that contribute to the seasonal changes in your credit score which include: making application for a new line credit or loan, expiration of your credit report listing, alterations or changes on your current loan credit limit, submission of new information from creditor to the rating agencies, closure of your loan account and lastly late repayments or default.
The best approach to improve your credit score in 2019 starts with an evaluation of your current financial needs and developing necessary strategies that can improve it. Your credit score is directly related with your financial requirements. If your financial position improves, then your credit score rating will be positive.
Before you advance a new loan, ensure that you have fully settled the previous loan. This will put you in a good credit position as well as increasing the chances of being awarded a higher loan limit on your next loan. Additionally, good credit rating can improve the probability of approving your loan application.
To improve your credit rating and get extra money to finance or grow your small business, consider the following 7 principles.
Principle 1: Reduce your credit cards limit to improve credit score
To reduce the potential trap of slipping into unnecessary debts that can limit your credit score progress, you should consider reducing your credit cards loan limit. This will help you to only borrow what you can easily settle and avoid defaulting.
Principle 2: Consider loan consolidation to boost credit score
As discussed in our earlier post, to reduce dragging yourself into huge loans that are hard to pay, consider consolidating all your personal loans into one and discussing the best approach you will use to settle them. Debt consolidation reduces your chances of defaulting and obtaining a poor credit score. Therefore, you will now be in a position to negotiate new repayment terms that reduces your high chances of defaulting on multiple loans.
Principle 3: limit or reduce your loan application to promote credit score
To be on the safe side, you should reduce the rate at which you apply for loans. Multiple loans at the same time can send a negative information to lenders questioning your ability to repay them. Advisably, contemplate on making one loan application at a time. After settling it, you can consider getting a new loan with a higher limit than making multiple loan applications to different lenders.
Principle 4: Service your loans timely to improve credit score
Timely repayment of your loan is the best approach you can use to improve your credit score. By so doing, lenders will be convinced that you are better positioned to meet your obligations timely and hence a plus for your credit rating. One method to maintain your credit score through timely repayment is to simply to get a new loan and use it to service the due loan to avoid defaulting.
Principle 5: Pay your personal bills on time
Credit rating agencies use a wide range of information from your profile to determine your creditworthiness. Such information can include data relating to your bills like rent, mobile subscriptions and many more. To avoid a bad credit score, ensure that you settle all your bills timely because credit rating agencies get a lot of information from your profile on how you settle your other bills.
Principle 6: Never default on your mortgage
For those who are servicing house loans, make no mistake of defaulting on them because they are directly linked to your creditworthiness and the chances of being degraded on the credit rating scale is very high. Also, ensure that all other loans are paid timely. This will go a long way in promoting your credit score in 2019.