In the modern world, having a good credit rating is essential for anyone who wants to buy a house, car, or even a holiday. But getting a decent score is a challenge. Credit rating agencies collect masses of financial information on all of us, prying into our financial lives. They use the data they gather to work out whether we can pay creditors back or not.
For most of our lives, our credit score is neither here nor there. But there are flashpoints where it really matters, such as when buying a phone or a car. And when our scores are poor, it can put a real spanner in the works, making it less likely that we will get the money that we need.
So what’s the solution here? How do you make yourself irresistibly creditworthy? What can you do to get lenders to literally throw money at you?
Pay Off Your Credit Card In Full Each Month
Paying off your credit card in full every month is one of the most powerful things that you can do to boost your score. Credit rating agencies see them money you spend on credit as a form of short-term debt. Thus, if you’re able to pay it back at the end of the month, it shows that you have the financial stability and discipline to make good on what you owe.
Take Out A Car Loan
Improving your credit score can sometimes feel a little bit like a catch-22 situation. You need to take out a loan to improve your rating, but you can’t take one out until your score improves.
Fortunately, there are a variety of companies out there, offering loans to people who don’t have the best history – or none at all. Martin Brothers Motor Company, for instance, says that you can now get finance on vehicles, even if you have a low rating.
This change in the market is important. What this means is that people who don’t have high scores right now can do a considerable amount to improve their financial standing in a very short space of time.
Increase Your Income
Credit rating agencies are increasingly considering your income when deciding how much they should lend to you. Increasing the sums flowing into your bank account, therefore, will have creditors jumping over themselves to give you money.
Pay Off Your Mortgage Faster
Mortgages are a slightly different kind of debt to car loans or unsecured credit, but they still impact your overall rating. People who pay their monthly expenses year after year prove that they’re good for the money over the long term. And this quickly feeds into how likely it is that creditors will want to lend them money.
Stop Applying For Credit So Regularly
Annoyingly, credit rating agencies will take into consideration the number of times you apply for credit when deciding on your rating.
You can, therefore, start with a relatively high rating at the start of your search for money, and then see it tumble as you apply for more and more loans.
Where possible, try to see whether you can “pre-qualify” for money before applying formally.