How to Improve Your Credit Worthiness and Credit Score

Finance

Have you ever been denied credit? Have you ever been standing at the cashier counter when they apologize that you have been declined and it feels like everybody was staring at you? If you have then the chances are that you have never returned to the store or applied for credit again.

Sound familiar? If it does, below are some great tips to follow to help you improve your creditworthiness.

Take a Look at Your Situation

The worst thing that you can do is to get depressed about your financial situation and do nothing to change it. Instead, take the initiative to get everything sorted. Start by creating a budget which clearly shows your monthly income streams matched against your monthly expenses. If you have expenses which span over a period of months, such as your utility bills, apportion their estimated cost into monthly installments.

Live Realistically

Part of repairing your credit score is maintaining consistent savings. This means contributing the same amount of money each pay towards your savings. To a lender, this says that you are stable and can stick with a budget.

For this to work, however, your budget has to be realistic with a little room to move. Plan for things like entertainment, eating out, or even a monthly browse through the Groupon Coupons page for LL Bean. Whatever it is, keep it in the budget so that you don’t blow your spending and disrupt your savings.

Consolidate Your Debt

If you are paying the minimum payment against an array of small debts then you all you are doing is treading water. The best thing that you can consider doing is to roll all of these debts into one larger debt, known as a debt consolidation loan. This loan not only reduces the overall amount of interest you will pay but also make your payments more manageable and effective.

The trick to this tip is to ensure that you close all of your previous lines of credit once their balances have been cleared. If you don’t then you are just setting yourself up for failure by creating two debts. If possible, look for a loan which requires you to present your cards to be destroyed and requires closure confirmation from your creditors.

Switch to Direct Debits

Along with your consistent savings, it’s important that you also pay your bills on time. Not one day late. Not just $5 less. On time and in full. And the best way to achieve this is with direct debits.

Create a bank account which you use solely for direct debits. Then, each month, transfer the allocated amount for your bills into the account. That’s it! That’s all you have to do! Your provider’s direct debit systems will take care of the rest and you can enjoy an improved credit score.

When working to improve your credit score it’s important for you to remember that the process isn’t something which will work overnight. However, if you stick with it then it will happen.