Credit Score- Deal with them

Credit score often acts as the decider of your life. Any discrepancy should be removed while dealing with the bureaus and every effort should be taken to maintain a high credit score.

Credit Score plays a vital role in getting loans but the individual with low credit score should not feel disheartened. There are some tips with the help of which they can improve the scores and lead a happy life.

People find it difficult to manage the credit scores as they are unable to make timely payments on loan or mortgage payments. So when an individual has bad credit score bank looks suspiciously and generally charges money for this risk of trusting the individual.

When an individual has to pay more interest on loan it is generally because the individual has bad credit record. Also the people with good credit rating get the loans easily as compared to the people with bad credit score. So here one can get that credit scores play a major role in getting the car or home loan.

Other than personal loans for bad credit scores are being looked at more and more areas and employment being one of them. A lot of employers are demanding to look into the credit reports of the individuals as a part of the background verification before actually making any offers to them. The likelihood of getting a job becomes higher with a higher credit score. Even in case of acquiring a rented accommodation lenders are seen asking for the credit score to verify if the tenants could pay the rent or not.

So looking at the increasing dependency on the credit scores for all the decisions in your life it becomes all the more essential that one maintains a high score and for this if they have to put in extra efforts they should o for it.

There are some techniques should be followed in order to get the scores better.
Credit Score
The key to understand creditworthiness evaluated by lending institutions is called credit score. A good credit score can make getting loans easy.

Credit bureaus are statistically evaluated by payment history, loans outstanding and general indebtedness. Equifax, Experian and Trans Union are the big three industry. On the basis of the compilation of the data, the profile of an individual is given number between 300 and 850. Here, 300 show least credit worthiness and 850 being the most.

 

This credit score determines whether an individual will get that mortgage loan or not. After knowing the importance of credit score, lets take five tips to raise the bad score and win the favour of banks.

1- Try to pay more than the minimum amount
It is advised to always make payments above the determined amount and the minimum amount. The length of time duration of the repayment is also considered not only the amount to be paid back.

There is no guarantee though how much this will increase the score. There are number of factors which determine the credit score of an individual but this can accelerate the payment and increase the credit score. Timely payments can make the repayment easy and this is the technique advised at the primary level for any individual.

2 -Make a plan

Many individual do not know that when they face any crisis or are behind the schedule to make debt payments, the lenders are ready to negotiate and even forgive some portion of debt. Lenders get ready to negotiate because they know that the option of hiring a collection agency or losing the money in a bankruptcy proceeding is even worse.

One can reach the lender and ask for some more time, if one wants to reprieve. Even a revised payment schedule can be presented. There is good chance that the lenders will accept the proposal if it is beneficial for both the lender and the individual. As soon as the individual gets to know that the lender has forgiven a portion of debt, he should make sure to give this information to the major credit bureaus so that they can make appropriate changes in the credit report of the individual. People who have less debt and make timely payments get higher credit score.

One should also keep an eye if the appropriate changes occurred in the credit report or not. An individual is entitled to get one free report every 12 months.

3 – Switch from Credit to Debit Cards
Credit score is adversely affected by the credit card debt. Therefore the best way to keep the scores up is to pay back the credit debt right away with the use of debit card.

In debit card the individual firstly deposits the money and then uses the money. There is no credit involved in it and one just uses the money one actually possesses.

By making the habit of not using credit card and repaying all the credit as soon as the credit piles up, is the solution through which one can have better credit score.

4 – Cut Up Those Store Cards

There are many people who have many cards which cause a lot of problem to them. The more open accounts an individual has the lower becomes the credit score.

The credit bureaus are of the view that an individual can tap all the credit sources to max and it can accumulate a huge amount of tax. There is high probability that the individual takes the high interest rate debt and can maintain small balances on each of the cards. If an individual doesn’t carry any outstanding balance one can simply call and cancel the cards.

If an individual has balances on various cards then one should consider the option of consolidating the debts. It is better to have a no credit check loans at 12% than to have 20%+ some rates. If one does not want to go for consolidation then consider paying off the debt with highest interest rate, first and close out the accounts in the same manner.

When the cards would be reduced to one or two credit cards, it will be easier to make monthly payments and reviewing the statements.

5 – Add Comments to the Credit Report

One can find errors while going through the credit report. Sometimes, the credit bureaus skip some of the details like one has paid off the debt but still it is shown on the report. The first thing one should do after finding it out is to contact the credit agency and tell them to make the changes right away.

Very few people know about this but there is a space at the bottom of the credit reports where they write down the comments. It can give an individual a chance to explain why a particular debt has not been paid or to point out an error. The individual would need to meet the credit bureau directly and give the documentation in such case.

This comment won’t help an individual to increase the score but it can provide clarification to the lending agencies.
Responsibility and discipline can help an individual to get out of the vicious circle of the low score. This is not the end of the world. The tips provided above can be very useful and fruitful for the individual. It can improve the score but its not a magic wand, persistence and patience is essential.

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