One of the most important things a lender will look at when you apply for a loan is your credit history. Your credit history could mean the difference between getting a home loan or not. If you are struggling with a poor credit history and are worried about approaching a lender for a loan, don’t worry, we’ve got 4 valuable lessons to help improve your credit history in no time.
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Our first lesson is a big one. In order to quickly improve your credit history, you must stop using your credit card to make purchases. This will only make matters worse for you in the long run, as it will raise your credit balance and ultimately disrupt your credit score.
If you can, choose to make purchases using cash only. Better yet, if you are able to, try to avoid unnecessary purchases altogether and instead put that money towards paying off your credit card.
This may come as a given for many, but it is still worth mentioning. If you make the effort to consistently pay your bills on time, lenders will take this into consideration. It shows that you are actively trying to improve your credit score. To stay on top of things, try writing due dates down on a calendar, or set reminders for yourself regarding when certain bills might be coming. If possible, even set automatic payments for any bills.
Also, if you currently have any outstanding bills, it’s best to take care of those first. This will put forth a positive contribution to your credit data and will help improve your credit score.
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When trying to improve your credit score, it is important that you do not close any accounts. In fact, they actually may be able to help you. Lenders will want to see that you currently have at least three open sources of credit. The longer you’ve had an account open with no issues, the better, as it’ll also improve your credit age and therefore help with reducing your credit score.
During this time, it’s also best to not open any new accounts either. Do your best to not shop around for opportunities to open new accounts. This means putting off purchasing a new car, applying for a new credit card or approaching a lender for a home loan. This can all be done at a later time when you are in a better financial position.
Last, but not least, one of the most important lessons you’ll learn when it comes to repairing your credit history is to be patient and persistent. It’s important to keep in mind that the damage done to your credit file did not appear overnight and, therefore, it will not be repaired overnight.
By actively making the effort to improve your credit score, you are taking control of your financial situation, meaning that the tough times won’t last forever. Keep trying to the best of your ability and you’ll have a clean credit file in no time.
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