A few years back when the economy was witnessing the boom period, credit was readily available and most didn’t really pay attention to their credit scores. But with the economic recession lenders have tightened their purse strings and people with poor credit scores are finding money increasingly hard to come by.
The present day scenario demands a credit score in excess of 740 to avail the best loans and interest rates. If you are amongst the privileged few who have a good score then you automatically get access to great deals and most importantly have options available to shop around.
Well as they often say it is never too late to make a beginning and while you can’t expect overnight results there are some definite steps you can undertake to reach that magical figure of 740.
Break even with your expenses: Before you even attempt to improve your credit score you must fix money matters closer to home. Unless you are able to generate enough money to meet your expenses and allow a little surplus to start paying off your debt, improving you score is merely a pipe dream.
To generate a credit score you must use credit: A credit score as the name implies scores the manner in which you handle credit. This includes how much of it you use and how responsible you are in your repayments. This information in turn generates a risk profile of the credit user. Of course it is possible to quantify all of this only if you use credit. If you choose the prudent lifestyle of using only cash then there is no means to profile your credit history. You are unable to not just augment your score but in the medium to long term you may also end not having a score generated for you.
Avoid paying interest on your credit card: Use credit but try not to extend the facility. Having a balance incurs high interest rates and this can draw you into a quagmire where you are losing precious money in just keeping the interest component in check. Most of those who have great scores have been smart about using credit. They ensure that they are meticulous in their payment and end up not having paid a single penny towards interest.
Patience: As with most things in life the duration of the repair phase is proportional to the extent of damage. If you have had tax liens and bankruptcies filling up your past then expect a fair bit of time to pass before you move back to healthier ground. In any case the steepness of the upward curve is linked to how much you pay back and how quickly and of course also bearing in mind how far out in the negative you were when you got started.
Having understood the fundamentals of credit, get a grip on these aspects of your life and you are sure to see your score inch closer to the 740 mark sooner rather than later!
By: Navendra Pillai About the Author:
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