Why is it important to improve credit score? If you are into travel hacking, you need a good credit score to be approved for travel credit cards. A credit score is very important because it gives a bird’ eye view of a person’s financial capacity to pay. For example, a loan will not be given by any financial institution like banks or online institutions like Payday Depot to a borrower that has a low credit score.
Even millionaires need a good credit score. Why? Because millionaires get their fortune by using borrowed funds to finance their businesses. With a low credit score, they will not be able to borrow more funds to grow their businesses. Aside from that, a high credit score can help borrowers get access to lower interest rates from banks and other financial institutions.
How to improve your credit score?
In case of a bad credit score, don’t fret because there are many ways to improve your credit score. Just make sure to keep these in mind:
1. Never miss a due date
It is very important to never miss a due date and make sure to pay on time. It is way more important to pay on time than to pay in full.
2. Pay the minimum amount due
As stated earlier, it is important to pay on time. But if you don’t have enough funds to pay off your outstanding balance on time, you should at least pay only the minimum amount due.
3. Limit new credit card requests
If you want to keep your credit score stable, avoid getting new credit cards. Not only will you need to keep up with your old ones, getting a new one will only add up to the bills you already have to take care of.
4. Avoid hard inquiries on your credit score
There are generally two types of inquiries when it comes to credit history. The first type is a soft inquiry, which may include potential employer checking prior to hiring. This type of inquiry does not affect a credit score.
However, hard inquiries that include credit checking for loan applications or new credit card applications may adversely affect credit scoring. This is also why the number 3 option is included in this list.
5. Don’t close your old accounts
Typically, people would close their old accounts once balances are paid in order to avoid getting into another debt trap. But this is not a good idea. In fact, it is better to keep old accounts open in order to increase credit standing. A long-standing relationship with a financial institution can help as proof of a good credit score.
6. Don’t be delinquent
It is always a good idea to deal with delinquencies and resolve them before interests get out of hand. Make sure to avoid late or missed payments. Again, it is better to pay off the minimum amount due rather than miss a scheduled monthly payment.
7. Consolidate your debts
An average person has at least 3 credit cards. So, it is typical for a person to have various cards. But it would be a wise decision to consolidate all debts into one card in case of delinquencies.
These are just some of the ways to improve your credit score. We hope that this article has provided the readers with more than enough information to keep credit scores high.