Maintaining a good credit score is not rocket science nor is it as hard as it may be made out to be. Yes, it is very important to have in place a good credit score because this determines the access that you will have to any type of loan in the future. So, even if you have a not-so-great credit score, do not worry. There is always a way to repair it. All you need is some discipline, time, commitment and of course, patience. Here are some simplae tips that will help you in this aspect:
First, you should know your credit score
Most people do not know their credit score or even know what a credit score is until they apply for some form of credit. This will cost you a hefty price, and quite literally, when you really need a loan at some point of time in your life. Send out requests asking for your score and remember, most credit bureaus give out an assessment report for free. Once you have a report with you, you can take the first step towards improvement. Now, you will at least know where you stand, so you will definitely know if you are in a good place or if you have to work hard to make an improvement.
What is a good credit score
The next thing that you should know is whether or not your credit score is good enough. A credit score ranges anywhere from a 300 to 850, with anything above 700 being considered as a ‘good score’. Remember that just because you have a good credit score as of now, it does not mean it will last forever, you have to make an effort to maintain your credit score by being financially disciplined. Also, if your score does not look very promising, fret not, with time it will improve and reward you in many ways.
Look for any errors
One of the most important things that you have to do at any cost is to check and see if there are any types of errors in your credit report. Any mistakes will cost you and burn a big hole not only in your ability to seek out credit in the future but also jeopardise your entire financial future. Do check if there are any type of discrepancies in the score, take a look at them and bring it to the attention of the credit bureaus with immediate effect. There is a chance that there may be some discrepancy in these scores. You can just write an email to the credit bureau or dispute the error through online means.
Repair the damages
Once you know your score, know where you stand and there is no error in your report, it is important to take stock of the situation and do what you have to do. Essentially, only if you plan your finances and lead a disciplined life can you make amends. Take a look at all the outstanding debts that you have and see how you can handle the same in a smart manner. Start making bill payments on time and do not default payments or delay paying bills at any point of time as this will have an adverse effect on the credit score.
Have a budget
Though this may sound like a cliche, having a good and doable budget in place certainly helps in the long run. Not only will this help rejuvenate and help maintain your finances, it will essentially then lead to a good credit score. The first thing that you need to do is to sit down and see what you take home each month, after deductions. When you know what your monthly inflow is, sit down and carefully plan your expenses. See where you shell out the most amount of money each month. Now, once you tighten up the strings on your spending, use the extra cash to mend or improve your credit score.
Know your credit card limit
Most people do not know the credit limit that they have on their credit card. It is important to know this amount and spend accordingly. Maxing out credit limits can damage credit health and have serious repercussions on the credit score of the individual. This is why it is important to be aware of the credit limit that your credit card offers before going on a swiping spree.
Pay your EMIs
If you have a loan in hand, make sure you make payments towards the same on time. Even a delay by one day will be considered a late payment and will end up putting you in a soup. The same applies to your credit card bill. Make sure the credit card outstanding is paid at least a day before the deadline. Also, stop making minimum payments, you have to pay the entire outstanding in order to have in place a good credit score or repair a bad one.
To put it in simple words, the trick here is to first be aware of where you stand and then make an effort to work towards better credit health by taking conscious steps.