The importance of a good credit score in the modern world cannot be overemphasized. It is almost impossible for anyone to lend you money if you have a poor credit score. A good credit score is an indication to potential lenders that you can manage your money well and will be able to pay back what you owe them. It is important to note that having no credit is not the same as good credit. Just like a poor credit profile, a little credit history will work against you because it makes predictions about credit behaviors less certain. It is not very difficult for you to improve your credit score if you have no credit or poor credit. You can actually use your credit card to improve your credit score.
How to Go About It
Request for your credit report from a credit bureau and check what your credit score is. Go through it thoroughly to check for errors and if you find any, you can dispute the record with the credit bureau. If you do not have a credit card and hence no credit history, you should get a credit card and use it responsibly and you will soon have a good credit score. You may not be able to get a card that requires you to have good credit, but there are cards for people with poor credit and these are not a bad place to start. Settle for one or two credit cards with the best terms in regards to interest rates and rewards such as cashback credit cards. With cashback credit cards, you are given a cash reward every time you use your credit card.
For you to have a credit record, you have to regularly use these cards. One of the key things that are considered when calculating your credit score is whether you make your payments on time. In fact, this accounts for almost 40% of your credit score. Therefore, for you to have good credit, you must always make your credit card payments on time and in full. If you do not pay in full, the balance accrues an interest which increases your payments and lowers your credit score. This is the last thing you need when you are trying to improve your credit score, so always pay what you owe in good time.
For you to avoid spending too much and being unable to pay what you owe in good time, do not spend more than the amount you have in the bank. Keep track of your spending; you can even use finance apps to help you plan and keep a record of all the money you spend. You can also set payment reminders on these apps to help you make all your payments on time.
It takes time to fix your credit report and raise your score. It is not something that happens overnight, but you will be amazed at the results if you just follow the tips above. It may also be a good idea to partner with a financial expert to help you out. Find out more about cashback credit cards and get a free credit report at Clearscore, who is known to have helped many people struggling with a low credit score to understand and improve it.