Banks uses your borrowing and repayment history to decide how credit worthy you are. If you ruined your credit history by splurging on credit cards, your low credit score will ensure no more loans. A good credit history will make your next application for credit go smoother at a better rate of interest.
Tips on improving a credit history to high credit score.
Manage your credit accounts responsibly. Maxed out credit cards reduces credit scores. Bring them below the credit limit and pay remaining balances. Do not open unnecessary credit accounts to increase available cash. Borrow less and pay on time. If you are new to managing credit, do not open a lot of accounts in a short time, as this will decrease your credit score.
Pay on time to erase bad credit history, continue paying your bills on time, for as long as possible. Use technology to automate bill payment process and eliminate missing out important dates.
Keep track of credit report. Follow your credit reports regularly. A credit report can be obtained with a request to the credit bureaus. Do not forget to highlight and dispute any mistakes in the credit report, as these are an indication of your credibility.
Learn to manage your finances. Take financial classes, if necessary to reign in money management techniques. Pay outstanding balances and reduce your debts. It is more useful to reduce the amount you owe, rather than consolidating it in lesser number of accounts. Purchase items of necessity on a priority when you don’t have enough to make ends meet.
Look for fixed interest rates to pay off loans. Search for options that can refinance existing loan on a lower rate of interest or on fixed interest.
Hold on to old credit cards and old credit accounts. Closing an inactive credit account and credit card will serve to reduce your credit score. So take them out and use them at least once a month. Closing an inactive account will still show in your credit report.
Reduce your credit shopping time. When you require credit to meet your needs, complete shopping for it in less than a month’s time. When you apply for credit, to determine your credit worthiness, companies enquire from other credit rating agencies. If you have asked for credit from too many of them (even if you were trying to search for the best one) for too long, your credit score will drop!