Credit score is the king of your financial life. It can affect smallest to biggest decision. With excellent or good credit score, you can win approval on the brightest product of the finance market. If you have fair credit score, your possibilities decrease. If it is bad, oh, things get tough and availing even a personal loan may become difficult.
Bad credit situation is an expert of spoiling lives. It happens when you miss to pay debts. Soon your financial conditions become notorious. Finance companies ignore you; they do not want to give any loan, insurance, credit card etc. On the other side, the creditors chase you. Surely, you do not want such mess, but that is impossible if there is no improvement in credit score status.
Before the money matters get worst, work on the following 5 practical tips and improve your credit score.
#1 – Start paying debts on time
Pending debts are the most dominating reasons of degrade in the credit score. If you really want to bring betterment, then work on this part on priority.
How to do this smoothly?
First of all, categorise the expenses in two categories
- Priority debts – Rent, mortgage, council tax, payments ordered by the courts, electricity and gas bill,
- Non priority debts – Credit card debts, water bills, hire purchase agreements, loans from family and friends
- Pay the priority bills first as they aggressively affect your credit rating. But keep trying to pay the non-priority debts too.
#2 – Credit card dues – Do not pay only the minimum amount
Mostly people fail to pay the credit card instalments on time. The high interest rate on every pending payment keeps adding in the debt making the burden monstrous. As a solution, you pay the minimum due amount and consider yourself in the safe zone.
It is not a good approach. You should always pay the monthly instalment in full or at least half. This is because the minimum amount you pay on credit card is equivalent to the interest of the previous month. It has only a small bit of principle amount. To prevent the further degrade in credit rating, you have to stop the practice of paying the minimum due.
#3 Have moved to a new place?
Get registered in the electoral roll with the new address
You may find it negligible in importance but getting your name registered on the new address is vital.
The major reasons for this are –
- Someone may do a financial fraud by using your old address. In your documents that place still belongs to you. The fraud done will be counted in your name. This brings further degrade in credit scores.
- The finance companies always check electoral roll to find your latest address. If you have applied for any financial product and they do not find you on the mentioned one, your application can get rejected.
Better thing is to update your latest details of residence in the electoral register. In fact, you should mention in the financial records too.
#4 Quit from the mutual financial commitments after divorce or separation
If you are now living separately from your partner then forget not to clear everything on the part of the financial responsibilities. Any joint bank account, loan etc. should be dealt in the legal attention. This is necessary because the financial behaviour of your partner affects your finances too. For instance – if you were a co-applicant in a loan but he/she is not paying the instalments on time, you will get affected.
In case of missed or due payment, lenders will contact you. In fact, in case of default they will chase you to pay off the funds, as you are the equally responsible borrower. This can turn your already bad credit situation into worst.
#5 Apply for a specialised financial product that serves to poor credit scorers
With the advent of advanced version of finance industry i.e. FinTech, better possibilities have emerged. Gone are the days when you were devoid of financial opportunities because of poor credit score. Nowadays, specialised products are in the market to ease the stress of the people with less-than-stellar credit score performance.
There are guaranteed bad credit loans that are specifically designed to help people in their tough times. The loans solve two purposes.
1) Provide money to the borrower during any financial crisis.
2) Help to improve credit score through customised deals, as the instalments are small. By paying the funds on time, the borrower improves the credit rating.
In case you want to consider this option, you can take out guaranteed bad credit loans without broker from direct lenders such as British-lenders.uk in the UK. The best part about them is the assured approval and availability of funds with no guarantor. People with the ultimate aim to attain improvement in credit score performance can borrow the funds through online lenders on a low interest rate.
The above tips are all useful but the absolute prevention from bad credit score is self-discipline. Tailor your habits and avoid careless spending as well as pending debts. Life is beautiful and you can keep it calm by playing smartly with the most hypnotising asset of the modern world i.e. Money.