Many people have a general idea of their credit score and check it regularly to make sure that it’s accurate. However, some people don’t ever check their score. And then when it comes time to buy a large ticket item such as a home or a new car, they find out through the application process that it’s not good enough to take out a loan for the amount they need.
Trickle Down Effects of a Poor Credit Score
Unfortunately, having a less-than-stellar track record doesn’t just affect your purchase power; it costs you more in every aspect of your life. When you have a low credit score you are regarded as a high risk. This means that when you move into a new place and have to turn on your utilities, you’ll need to put down a larger deposit. When you shop for things like car insurance your option are limited and getting overdraft protection from your bank may not be possible. It can also prevent you from getting a job that you are qualified for. Luckily, there are lenders like Maxlend https://www.maxlend.com/
Ways to Improve Your Credit Score
There are several contributing factors that credit reporting agencies use to determine the final score. The three that affect your number the most are your payment history, debt-to-income ratio, and length of your established credit. By making your payments on time and reducing your outstanding debt, you can improve your credit score over the course of just a few months.
Refrain from Applying
If you know your score is low, it’s important to limit inquiries into your credit as much as possible. Every time you apply, whether it’s for a loan, a new credit card or a mortgage, you reduce your number and the inquiry gets reported. While it’s only 10% of the final score, it still lowers it.
Pay Down Debt
One of the best ways to reduce your debt and raise your results is to double up on payments and refrain from buying anything on credit. If you don’t have wiggle room in your budget to tackle all of your debt at once, focus solely on the debt that has the highest interest rate. In most cases, this is your credit cards.
Learning to Manage Your Money
A budget is a good place to start learning how to manage your money. It gives you a clear view of what you owe and what your net income is each month. A budget will also help you to make smarter choices when it comes to spending your hard-earned money. But, a budget isn’t just about today’s finances; it provides you with a way to achieve a bright financial future too.
Having a good credit score is important to maintaining your quality of life. The bright side is that even if your score is low today, you can improve it over time and put yourself back in good standing with future creditors.