Are you struggling to mend a poor Credit Score? Relax, we’re here to help you understand what it is trying to tell you.
Is your Credit Score bearing the brunt of your poor financial decisions? Having just stepped into the new financial year, 2019-2020, it’s time to make a fresh start to put your finances back on track.
Your Credit Score is a measure of your credit worthiness. More simply, it speaks of how well you manage your money. This number directly impacts your ability to get a line of credit, get a Home Loan, purchase a car through a Car Loan, rent an apartment, and get a job of your choice, etc.
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It’s wise to avoid the risk of being rejected for a loan by checking your score regularly. This way you can make sure to have a good score before applying for credit from a lender!
- Not sure whether your score is poor?
Before we begin, let’s get a clear idea of a poor score. For starters, your Credit Score falls in the range of 300-900, marking from low to a high score! Any score below 650 showcases the need for improvement.
If you’ve scored in the range of 300-550, it is quite concerning, and your finances need considerable attention. A poor score such as this results out of multiple missed deadlines, irregular payments, and unpaid dues.
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- What are the factors that could have reduced your score?
Time to get to the bottom of things. Let’s diagnose your low score to understand the possible causes for it.
If the amount you owe is too high and you’re having a tough time paying off your debt, it’s sure to affect your score negatively.
Lodging too many queries for credit can make you seem desperate in the eyes of the lender, besides portraying you as unable to manage your finances. Trust me, that’s the last impression you want lenders to have of you.
Most of us tend to abuse our Credit Cards and think that it’s okay to pay just the minimum amount due each month. If this is not a sure recipe for a plummeting score, I don’t know what is!
Untimely payments and missed deadlines also contribute to a poor score. If you tend to miss payment deadlines, be sure to set a reminder.
You can make use of online services that send you emails to remind you of payment deadlines. What you could also do is get in touch with the concerned bank to set up an automatic payment facility.
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- How will you detect the reasons for which you have a score below 550?
All the factors contributing to a low score may not be applicable to you. For instance, if you’ve just started building credit, your accounts will still be young. Now, your score also depends on the age of your credit portfolio. So, if your accounts are still new, you’ll have to give it time for your score to build.
Having said that, how will you know what factors are bringing down your score? It’s simple, you’ll have to look into your credit report. Confused? Your credit report is nothing but a roadmap to your credit history. It is a report containing complete information regarding your credit accounts and debts.
If you read your credit report carefully, you’ll be able to identify patterns in your credit behaviour. If you scan your report closely, you’ll have a better idea of where you’re going wrong.
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- Let’s check out a huge Credit Score myth that needs to be debunked
One of the most popular myths associated with Credit Scores is that checking your score will reduce it. Now, before you believe such notions, here’s what you must know.
Credit inquiries are of two types – hard and soft. A hard inquiry is when a prospective lender checks your credit report to determine whether you are responsible enough to handle credit.
Usually, a hard enquiry has a minor effect on your score. However, if you make multiple enquiries in a short period of time, you might severely damage your score. Remember that hard enquiries stay on your report for about 12 months.
When you check your own score, it passes off as a soft enquiry. Checking your score yourself has no impact on it, so go check your FREE Experian Credit Score in under 3 minutes!
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- What more can you do for your Credit Score?
Let’s consider a scenario wherein a debt that you haven’t taken is appearing in your credit report. If it goes unchecked, it will appear as a missed payment in your credit report. By the time you realise what’s wrong, it may deal a detrimental blow to your Credit Score.
It’s important to note that it’s crucial that you verify that accuracy of the information in your credit report regularly. Any discrepancy in details must be reported to the financial bureaus and fixed immediately!
You can make a huge difference to your score by routinely checking your credit report besides making sure that you pay off your debt and make timely payments and in full.
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Hey, we’ve got the bases covered! So, no more worrying about how to repair that low score! With these tips in your kitty, you’re guaranteed to be able to scale your way up to a shiny score that will make you proud!
If you’re on the lookout for financial products to build your portfolio, we’ll be more than happy to help. Say goodbye to drowning in a sea of paperwork and compare real-time quotes on Personal Loans and Credit Cards. Apply for the option that’s best suited for your pocket and get instant approval from multiple banks.