A bad credit score is like a stigma. If your credit report is not perfect, you will not be able to qualify for a loan at lower interest rates. Although you can take out small loans despite a bad credit rating, you will have to bear high-interest rates.
They can make it quite tough for you to pay off the loan on time. Most of the people do not realise that these loans seem very affordable, but they are not. Just because you have to pay back the whole of the money at once, it does not mean that you can easily pay them off.
You may not have enough money to repay, and this is often because of high interest. This is why it becomes crucial to improve your credit rating.
You all must know some ways to boost your credit score, and you have tried all of them, but you must be facing still some issues. Now the question is, what other ways you can follow to uplift your credit score.
Rarely followed tips to improve credit score
Here are some tips that you can use to improve your credit score:
- Report utility payments
When it comes to boosting a credit score, you all know that your lenders are to inform your timely payments of credit reference agencies, but at the same time, they are not bound to do so.
Their report of your timely payments can help you boost your credit rating, but you should also report rent and utility payments to make it faster.
You can ask your landlord to report your timely rent payments to credit reference agencies. Likewise, you can also request utility service providers to do this favour for you. This will give an immediate boost to your credit score.
- Stop putting in credit applications for months
Since you have already dinged your credit report, you should restrict yourself to put in loan applications. You all know that you should not fill in multiple applications at the same time, but you should also know that you should avoid it completely unless your credit score goes up.
Each time you apply for a loan, a lender will make hard inquiries, and they will show up on your credit report. Each hard inquiry pulls five points. This is because it indicates that you are not competent to manage your finances, and if you apply for multiple applications, your credit score will go down.
Lenders will assume that you are in desperate need of money, and as a result, they will doubt your repaying capacity. This is why it is recommended you completely stop putting in credit applications for several months.
In the interim, you should manage your finances more carefully. Here is what you can do if you are running out of money:
- You should create a lean budget that will help you meet only essential expenses.
- Cut back on discretionary expenses until your financial situation improves.
- Have a financial plan and stick to it, so you do not overspend.
However, if you still need to borrow money, you can take out easy loans in the UK. Make sure that you do not fill in applications with multiple lenders. Just apply for it with one lender and then wait for the response. You may get approval for the loan.
- Cut back on the use of credit card
Credit cards are the real culprits of having a bad credit score. If you have a credit card, you will be tempted to use it. Most of the people do not keep cash in their pockets. They find plastic cards convenient. If you are one of them, you should temporarily freeze it.
While using a credit card, you do not realise that the money you spend. This results in overspending, and as a result, you fall into a debt trap. If you freeze your credit card for some time, you will develop the habit of having cash with you. This will prevent you from using your credit card to buy anything.
By having cash, you can make a smart purchase. You will have an idea of how much money you can spend on a particular item. Further, you have already paid for it with cash, so you do not have to fear falling behind the payment due date. If you fail to pay within the grace period, interest starts accruing.
The bottom line
It can be quite challenging to improve your credit score, but it is not impossible. You need to manage your finances as well as bills carefully.
Timely payment of bills can help you improve your credit score. Limit the use of credit cards and do not apply for a loan with multiple lenders at the same time.
The tips mentioned above can actually help you boost your credit score.