What Skills You Need To Rebuild Your Credit Score
Your credit score plays a very important role in deciding if your loan application is accepted or rejected. If you are unable to get favourable rates then you might need to make improvements to your credit status. But you should be aware that building credit status is not a quick and simple procedure. The first step to rebuilding your credit score is to collect information about your credit report. Your credit report will have detailed listing about how you have handled your financial responsibilities and commitments over time. Creating a good credit routine from the very beginning will get reflected in your FICO Score and will be viewed by the lender as a low risk borrower.
Before you start the rebuilding process of your credit score, do keep in mind that it is a long term process and not a matter of a few months. Rebuilding your credit score is completely worth the effort. A less than perfect credit score can cost you thousands of pounds over the course of your lifetime and it can also become a source of stress and eventually make your life miserable. So, if you are struggling with your bad credit score then you are not alone. There are many people who are struggling to improve their credit scores. The best part is that there are numerous ways to build good credit and it will become easy to reap the rewards once you have a good credit score.
Some of the skills that you are required to build your credit score are-
Make Sure Your Credit Reports Are Accurate
The very first step towards improving your credit status is to first ensure that your credit report is accurate. Everyone can get one credit report from each of the three major UK’s credit bureaus- that are Equifax, Experian and Callcredit. You will never know if your credit report has an error unless you follow up. If you find any such error then you can report about it. Since your credit score is based on the data available in your credit reports, it is important to make sure all information is accurate. Any mistake in your credit report will get reflected on your credit score.
All Of Your Credit Accounts Should Be Reported
Check your credit report to see if there is any late or missed payments listed that you remember repaying on time or any accounts or loan applications that you do not recognize. Doing so will help you to go through your credit reports and pick out the inconsistencies. Remember that a credit report from one bureau may have an error, while the other report from another bureau may not. Therefore, it is important that you check all three of your credit reports for each bureau. Once you have gone through the errors, you can take the next step to rebuild your credit score.
Make A List Of What You Need To Improve
Not every error found in your credit report will cause you bad credit. For instance, if your name appears to be misspelled in the personal information section of your credit report, it will never cause your credit score to dip. There could be several other reasons why such errors are there.
- Your identity might have been stolen and the identity thief is abusing your credit.
- Your past collection account is still being reported.
- A bill that your ex was supposed to pay has not been paid for a while.
- You defaulted on your loan and now it is showing up as multiple defaults on your credit report since it was sold to debt collectors
- Your credit information got mixed with someone else who has a similar name.
So, once all the errors have been rectified and you wish to improve your credit report, make your action plan. You can start by setting up all your payments due date alerts based on your pay-check schedule and get yourself on the right track with time. Try paying off your debt instead of transferring it to a new account. You can also contact the debt collector to see if they are willing to stop reporting the debt to the credit bureaus if you make full payment.
Get A Credit Card
Getting a credit card and making on-time payments will boost your credit scores. When you have a fair credit score you will find many credit card options out there for you.
Fix Your Credit Utilization Ratio
Even if you may be making your credit card payments by the due date, your score will suffer if your credit card balance is used more than 30% of the limit. Your statement balance is likely to get reported to the credit bureaus every month. Thus, keep an eye on your balances and try to keep your credit utilization ration below 30%.