It’s scary when you get into a financial emergency without any savings. Good thing that banks and legal lenders are willing to lend cash. But imagine your horror when you can’t even get a loan because the bank or lender has discovered that you have a bad credit score.
Credit History Simplified
Gone are the days when people can simply borrow from a lender, and then once the transaction is closed, you can forget about it.
Nowadays, banks and registered money lending companies use credit history to know more about the borrowers.
Before you think that it’s unfair to share your credit history, you must know that it works both ways.
Every time you apply or get a loan from a legal lender or a bank, they report your credit details to the credit bureau. Then, the next time you get a loan, the bank or lender you are applying to will get a copy of your credit history to see if you have good payment behavior. If they know that you usually pay on time, they will give you a high score. But if you had a negative history or worst financial cases, you will get a low credit score.
Banks and legit lenders may see the same record, but the credit score will at their discretion. There is no way to know precisely how they do their scoring. Fortunately, we know that if you always pay your bills and loan on time, you will have fewer things to worry about.
Here are some tips to get a positive credit score:
How to Get a Good Credit Score
Getting a good credit score does not happen overnight. It required consistent positive borrowing and payment history.
Pay Your Credit Cards on Time
Credit cards are easy to use. With just one swipe, you can complete a purchase. However, it also brings a colossal spending temptation. Since you do not have physical cash, you will not immediately feel the weight of your purchases until the bill comes.
Add to that, credit card billing cycles are confusing. If you have multiple credit cards, you need to keep in mind how their billing cycle works. Some cycles have 20 days, while other cards have 25-day billing cycles.
The billing cycle means the number of days from the end of a billing statement to the next. It could be easy if all credit cards have 30 days. Unfortunately, that is not the case. It is confusing, leading people to mix up their due dates.
Missing your credit card bills means you will have a negative credit history. One or two missed due dates may have minimal effect. But months of unpaid bills will cause a problem directly once your interest charge and late payment fee increase.
The credit card debt will snowball, which will drag your credit history.
Get a Personal Loan
Having a credit card alone is not enough to boost your credit score. You need various types of credit in your portfolio. A personal loan will help you effectively only if you get it from legal cash lenders like these licensed money lenders in Tampines, including registered online lending apps.
Though these apps made the personal loan process convenient and quick, do not take them lightly. Take an amount you can confidently pay with ease. On the other hand, you are discouraged from getting a loan from unregistered lenders. Illegal lenders will never report your good payments to a credit bureau aside from steep interest rates and late penalty fees.
Apply for a Loan One at a Time
You have to take note of your loan inquiries. If you keep applying for loans just to see which one approves first, it can significantly pull down your credit score. This behavior will only show that you are desperate for cash. You are indicating that you have a serious money problem.
When in need of quick cash, some people would keep applying for a loan from different lenders. The licensed lenders can report loan inquiries too. If you need to apply for multiple loans, you have to limit your loan application to 1 to 2 weeks.
Do not Close Your Old Credit Cards
The older your credit card, the more history it has on your paid bills. If you already have multiple credit cards but have a hard time tracking your bills, choose to close the newer ones. If you close your old credit cards, you will lose the good credit history that comes with it.
Pay Your Mortgage on Time
When you buy a house using a mortgage, it will pull down your credit score. This is based on the debt to income ratio. The higher your current debt, the lower your score will be. To help your score recover, make sure that you pay your mortgage. It will take time to regain a more sturdy credit history. The more you pay in your mortgage, the higher your credit score will recover.
How Long Will it Take to Rebuild Your Credit Score
Rebuilding your credit score could take time. It will never happen overnight. Even if you get a credit-scored building company’s service, they will still tell you that you need to work hard for it for at least a couple of months to years.
It takes dedication and consistency. Pay your bills and loans on time every month. In case that you think you will not be able to meet your loan repayment, it is best to talk to your lender like yishun money lender to get a more flexible payment schedule.
To keep things on track, you can request your credit history and see what the banks and legal lenders would see.