Improving Your Credit Score

To some, a credit score is not much appreciated until they realize they have already an unimpressive financial reputation. Such circumstance is very common among students who are offered several credit options without considering the consequences when they are unable to comply with their obligations.

If your credit score is in bad condition, there are steps you can take to better it.

Get a Credit Card

Granting that you have a bad credit score, you may still apply for a credit card, if you have not already. Although you have to be warned that with a poor credit score, the credit card company will charge you with a high interest rate, but bear in mind that the purpose for this having a credit card is to improve your credit score, and not to accumulate more debts.

Having explained the above, it does not mean that you apply for a credit card from any company. Choose the one that is reputable in the industry such as Visa, Amex, Discovery, and MasterCard. If you have a credit card account with any of the above companies, believe that it will have a positive impact on your credit score.

Use your credit card (from the company mentioned earlier) in making low-value shopping. Insure that the value of the purchases made is within your capacity to pay. The low value is not much of weight. What is considered is your consistency in using the credit card and in making due payments. In time, these small steps are recorded and considered in determining your credit score.

Transfer Your Balance

Having an outstanding and big amount of balance on your credit card will have a bad effect on your credit score. What most consumers do is to transfer the balance to an account more favourable to you. Another option is to pay off your debt using a sum of money loaned from a friend or family member.

Debt consolidation is a good option as well. Find a company that offers a favourable program to consolidate your debts or take out your overdue balance. You have to understand though that in doing so, the company that will take out (pay off) your debts totally will charge you with higher interest rate, but on the bright side, there will only be one loan you should be vigilant about every month. This approach is given sound judgment in computing your credit score than maintaining several large debts on your credit cards.

Small balances spread throughout several credit cards are also viewed positively by the agencies having the obligation of computing your credit scores. These agencies consider the percentage of the credit available to you that you are using.

To illustrate, supposing on each of your four credit cards with $5,000 as credit limit, you incur $500 debt, the percentage you used against your available credit is only 10 per cent. But, if what you owe is $2,000 on a credit card with the same credit limit, the percentage you used is 40 per cent. If you transfer your large balance you will be viewed positively among investors.