The right way to improve your credit score to get a loan

improve your credit score1

Your credit score is important because it influences your ability to get a loan or credit card. You should check yours before applying for a loan and if it’s not in the best shape you can follow some steps to improve it. 

But first, what’s a credit score?

Information from the credit file creates the credit score. Two loan providers can offer different credit score numbers for the same individual because they use different criteria to asses their potential clients. The details in the credit report influence the lender’s decision if to approve the application, how much to lend, and how much interest to charge. 

Recent information has the greatest influence on the file because the current situation is the one that interests the providers. So, all financial decisions, good and bad, from the last 5 or 6 years create the credit record

For the applicants who miss some payments the lender can charge a higher interest or even refuse their application. Loan providers don’t like taking risks, so most of them don’t work with people with bad credit scores. 

What information is in the credit report?

The average credit report includes:

  • Your name, address, and date of birth

  • Credit applications

  • Financial links to other people

  • Late or missed payments

  • The sum you owe to lenders

  • If you’ve been declared bankrupt

It doesn’t include information like:

  • Your salary

  • Student loans

  • Medical history

  • Criminal history

  • Parking and driving fines

But the lender can ask you for extra information and details when you apply for a loan. 

How can you improve the credit score?

Some online lenders offer payday loans no credit check, but they are more expensive than traditional ones. So if you had problems managing your credit until now, and you need money fast, it’s advisable to work with a lender that doesn’t run a credit check, until you improve your credit report. And you can improve your score fast if you follow the next steps. 

  • Look for mistakes in your file. Sometimes a wrong address can impact your score because the lender thinks you provide false information. 

  • Register on the electoral roll. Lenders prefer people who register to vote. 

  • Pay your bill on time. You had a difficult time in the past to pay your bills, but now you can show lenders that you’re willing to change your behaviour. Paying your phone landline and internet connection is a great way to start. 

  • Check for fraudulent activity. Sometimes criminals use people’s credit details to apply for a loan in their name. So, if you think this happened without your knowledge, contact the reference agency to solve the problem

  • Look for connections with other people. When your spouse’s credit rating is connected to yours it affects your personal score, especially if they have a poor one. 

  • Don’t move your home often. Loan providers feel more comfortable if they work with someone with a stable residence. 

Published by Samantha Brown

Comments

Mar 4, 2020, 7:49:02 AM

Nice post

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