Easy Ways to Improve Your Credit Score In 2020
March 15, 2020
Your credit score is an important part of your life because financial institutions use this to determine your eligibility for a loan, as well as the interest rate that you are bound to pay. Apart from this, your credit score is also used as a basis by insurance providers in setting a premium for your home or car coverage. In addition to this, the credit score is also used as a basis by landlords to screen qualified tenants. Therefore, it is important to make sure that your credit score is healthy, and below are some tips on how you can improve it this year.
Set up an automatic bill payment process
To ensure that you don’t fall short of making a payment for your dues, it is a great idea to set up an automatic bill payment process. You can arrange with your bank if they have this feature, such that when you enroll your bills on their web or mobile applications, they automatically deduct from your account the amount that is due to your bill. If not, you have the option of setting a reminder or a notification a couple of days before your due date, followed up by another reminder a day before, or on your due date. This will ensure that you are on top of all your payments.
Pay down your balances
Apart from ensuring that you never miss a payment for your dues, you also need to pay down your balances and ensure that your loans and credit are at the minimum, or properly managed. For this, you can try the snowball method wherein you make a list of the debts you need to pay, starting from the one with the biggest interest rate. Make an additional payment on this loan, while making a minimum payment on all your other loans. When you pay off the first debt on your list, make an additional payment to the next debt on your list using the amount that you used to pay for the first loan. In this way, you will be able to settle all your dues, one a time.
Apply for a credit builder loan
A credit builder loan, which is also referred to as a bad credit loan, is a type of loan offered by a lender to an individual with poor credit, or to someone who is trying to build his credit score from scratch. People who consider bad credit loans are those who were not able to make timely payments in the past, getting a hit in their credit score. Nevertheless, applying for a credit builder loan is a good decision because once you make on-time payments, the lender will report it to the credit bureaus, improving your credit score. If you don’t have bad credit but are keen on improving your credit score nonetheless, then you can take out a secured and unsecured loan because there is a great chance that you are eligible to apply for a loan from a bank.
File for a credit report error dispute.
Monitor and keep track of your credit report dutifully. Inspect whether it is accurate and once you notice an error in the report, file for a dispute with the appropriate bureau immediately. Any mistakes that you find and corrected promptly can make a great impact on your credit score at the end.
Aside from filing for a credit report error dispute, it is just of equal importance to monitor and track your credit score, even if there are no errors found in your credit report. This is because when you do track your credit score, you will most likely gain an insight into the factors that affect it, as well as on how you will be able to address it. For instance, if you notice that you have several high balances, then you will be able to implement a mitigating measure to keep your balances at a minimum. In the same manner, if you notice that you have several late payments, then you will be able to execute a plan on how you will be able to make timely ones in the future.
It is true when advisors say that your credit score is an important aspect of your finances. This piece of information is used by several institutions as a basis of your eligibility for their services. Thus, it is important that you are a step ahead of your payments to ensure that you don’t miss any deadlines. In parallel, exert the extra effort to ensure that your balances are maintained at a minimum. These will surely help you in improving your credit score, starting this year.