Most people in this modern world that we live in have a credit card. And the people that don’t may actually be doing themselves more harm than good. Building your credit rating up is vital if you ever wanted to apply for a loan or a mortgage, so you can imagine the disaster if you have poor credit rating. If your score is not that fantastic you can have difficulties when trying to apply for new card, especially fit it is a low APR credit card deal that requires good credit ratings, and therefore you may have to settle for a higher interest card.
So are there ways to improve your score? Or are you stuck with it for life? Let’s delve into some ways:
1. Find out your credit rating
One of the first things you should do is obtain a current copy of your credit report. This way you can see exactly what state your credit rating is in. Where do you get a credit score from? Either Equifax or TransUnion provide them online. Be warned that sites will charge a fee for this, though you can calculate your credit score for free.
2. Does anything look out of place?
Look for any blatant errors on your report. Read through and if you find any mistakes – it’s actually quite commonplace to – go directly to the source of the mistake. Bring it to their attention, it could have been easily made and also easily rectified, thus improving your credit rating.
3. Obvious but important – Pay your balance!
If you have more than a few credit cards, try and pay off those cards with the lowest balances first. It may sound silly but don’t try and pay off your biggest balances; you’ll only make a tiny dent. It’s better to see progress with cards paid off in total, spurring you on, and showing the lenders that you are indeed taking positive actions to be more responsible with your spending. Once you have it down to a few cards, then it won’t seem like such a mammoth task, and as long as you make the minimum payments each month, you should be well on your way to improving your score.
4. Do you really need that?
Calm down on the overspending. Why go to all that effort to clear your balances, only to spend on them again? Keep one card as an emergency fund card, and only use in the case of an emergency! Kind of like “freezing your assets”, take the cards you have paid off and if you can’t bring yourself to cancel them, but them in a container full of water and freeze them! You’ll never be bothered to wait for it to melt and forget about that sudden spending impulse you had!
5. Wait for your score to improve
Refrain from applying for a new card just yet. If your credit rating is not up to standard, you will only be eligible for the high APR cards, and applying and getting rejected might harm your score even further. Remember your credit score sees you as a number not a person, your activity is logged on a computer and the purpose or reasoning behind is never known.
The bottom line – the longer you go paying off your balance each month the faster your credit rating will rise.
Find out what is a good credit score range.
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[...] Canadian Finance Blog: 5 steps to improving your credit score. [...]
[...] Canadian Finance Blog. Improve your credit rating in 5 easy steps. “Most people in this modern world that we live in have a credit card. And the people that don’t may actually be doing themselves more harm than good.” [...]
[...] Canadian Finance Blog offers advice on improving your credit rating in five easy steps. [...]
Actually, the best way to improve your credit score is to actually use your credit card on a regular basis to purchase recurring living expenses such as gas, groceries, utilities, etc. and pay off the balance in full every month.
If you do this month to month, your credit score will gradually improve over time as you are establishing a track record on your credit file.
[...] particularly enjoyed the article “Improve Your Credit Rating in 5 Easy Steps”; the article got to the point, and gave a great explanation on how to accomplish the task at [...]
Credit cards have their place, but far too many of us rely on them just to pay our bills, and the interest rates are crippling.