While getting a loan is never a good option, there are instances when it becomes inevitable. However, banks don’t give out loans so easily. You need to have a good credit score if you want to stand any chance of getting approved for a loan. Now, most of us don’t have a good credit rating. There might be several reasons for that but the fact of the matter remains that until your credit score improves, you won’t get a decent loan. So, what can you do? Well, the good news is that credit scores can be repaired. There are certain ways through which you can boost your credit rating.
Pay off credit card balances
The first thing that you will need to do in order to boost your credit score is to pay off any outstanding balances on your credit cards. Make sure that all of your credit cards are paid off and there is no lingering balance on any one of them. Start off by eliminating balance on those credit cards that have a smaller amount due. As you go on paying off these smaller debts, your credit score is going to improve considerably.
Timely payment of debt instalments
The second tip for improving your credit rating is to pay your debt instalments in a timely fashion. Don’t be late on any of these repayments. Make sure that you pay them on time. Being late in paying debt instalments can have a further detrimental effect on your credit score. Banks see this as a sign that you aren’t able to pay back debts and thus, become reluctant in approving your loan request. So, it is crucial that you give precedence to the debt payments above all of your other expenses. It will go a long way in enhancing your credit rating.
Don’t close credit cards, ask for an increase in their limit
Closing a credit card just because you aren’t able to pay off its balance completely or because it has a higher annual fee can be more damaging to your credit score. Therefore, it is a good idea to take a separate course of action. You can ask your credit card supplier to increase the limit of your credit card. The company might be willing to do this if it means keeping you as their customer. This will help you in showing the banks a longer credit repayment history with a particular credit card company. It will definitely ease their concerns regarding your ability to pay off the loan and also build up your credit score too.