How to Improve Your Credit Score in 7 Steps

Nikolai Kuznetsov  |


Wouldn’t it be great if you got instant approval for the money you need to finance whatever undertaking you have in mind?

What it comes down to is your credit score.

Simply put, a credit score is a measure of the trust lenders have in your ability to repay the amount of money you borrow in due time. Obviously, the better your credit score is, the easier it will be for you to borrow money to finance your projects.

Your credit score is based on quite a few factors such as whether you have paid all your taxes on time. If you have a bad credit score it means you failed to keep up with payments of your debts in the past – or that you didn’t pay them back at all.

If you have a very bad credit rating, it'll be harder and more expensive for you to borrow money although not totally impossible. What you need to do next is to rebuild your credit rating. Here are 7 tips I've gathered from my own personal experience.

1) Get a Copy of Your Credit Score and Dispute Any Errors

The first thing to do is to understand what the issues are hat have caused you to have a bad credit score, so you can focus on fixing them. To get your credit score, you can contact one of the official credit bureaus.

If there are any mistakes on your credit report, you have the right to dispute these errors to the credit bureaus – and it’s strongly recommended to do so, as it can improve your credit score.

2) Open New Credit Accounts to Build a Better Credit History (and Better Habits)

Do you know how to repair credit with credit cards? It’s easy – simply use a secure credit card and make your repayments on time. This will build a better payment history, as well as create better financial habits.

Secure credit cards can help you control your credit use, as your credit limit will match the size of your deposit.

3) Make Timely Payments as Often as Possible

Paying bills on time is one of the easiest ways to raise your credit score – you can setup payment reminders or automatic payments to help you. If you need more time to pay them, try to split your payments and spread them out across the month to make multiple monthly payments.

You credit payment history will improve and you will be considered a more reliable borrower by creditors.

4) Talk to Your Creditors to Negotiate the Terms of Your Loans

To stay in business, creditors need you to pay your debts - if everyone stops paying the creditors back, they will not be able to do business anymore. Talk to your creditors to come up with new terms that are easier for you to meet.

If you make an honest effort to find a better deal, you will show good faith and they might be able to help you reduce your monthly minimum payment, late fees, or interest rates.

5) Try to Make Additional Payments When Possible

Additional payments on your loans are positive and will help you pay off your debts faster and raise your credit score, as you will look like a more responsible and trustworthy borrower.

Don’t hesitate to rework your budget regularly, so you can see where to save a few extra bucks every month to put towards your loan.

6) Cut Expenses Where You Can

If you don’t already have a budget, get to work! Whether it’s for your company or your personal life, a budget will help you control your expenses and better manage your finances. It will be easier to know where to cut unnecessary spending to save more money.

It’s important to live within your means, so only borrow money for projects that matter, or for unexpected, but necessary, expenses.

Remember - It will take time to repair your bad credit history and improve your credit score, so don’t expect to see results overnight. You need to change your habits, adopt better routines that improve your credit score and maintain it over the long term.

Always stay aware of your credit score by monitoring it and checking it on a regular basis. Be patient and consistent, and you will see results!

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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