Having a bad credit rating can be an absolute nightmare for anyone who wishes to get a new credit card or even a home loan. If you have a bad credit rating, banks and finance providers will not release your loan easily and they may even reject your loan application altogether. However, there are several effective ways in which you can improve your credit score and make it easier for you to avail a loan. Keep in mind that a good credit score is absolutely essential for anyone who's looking to start a new business and get a loan, or apply for a personal loan and so on.
Disassociate Yourself from Financial Partners
One way to improve your credit score instantly and effectively is by disassociating yourself with your financial partner. Your financial partner, in this case, can be your business partner, your former spouse or even an individual with whom you have taken up a joint financial product. If your marriage or business partnership has fallen out and your ex-partner has a bad credit rating, it can severely affect your credit rating too. As soon as your partnership splits, you must inform the credit rating association of your disassociation with your partner. This will help bring up your credit score.
Deactivate Unused Credit and Store Cards
Another way to increase your credit score is by deactivating all unused mobile contracts, store cards, credit cards and direct debits. When you apply for a loan the lender will thoroughly investigate the credit you can access and also the amount of debt that you have. If you have credit cards that are not in use, it will increase your outstanding debt and reduce your credit limit for a loan. You may not get the exact loan amount that you apply for if the lender finds that your already existing debt is very high. Hence, it is essential that you not only cut up your unused credit cards but inform the financial services provider to close your account altogether.
Apply For Credit Cards If You Have Never Owned One
You can also improve your credit rating by building your credit card score. If you haven't previously had any credit card, it will become very difficult for any lender to assess your credit score. Inability to assess your credit score will become an issue for any lender to give you a loan as they will not be able to calculate your repayment capacity. You can prevent such a situation by applying for a credit card and making sure that you pay your bills on time. Alternatively, you can also opt for a direct debit system to pay your credit card bills with your bank.
Lastly, it is essential that any existing debts that you may have should be paid off on time. For instance, if you're paying interest on a bank loan, make sure that the interest is paid off to the bank every month and before the due date. Also try to clear off the entire loan amount as soon as possible, as this will help in increasing your credit rating. These are few of the most effective ways to repair a bad credit score or increase your existing rating.