5 Ways to Improve Your Credit Score | Freedom Cars

5 Ways to Improve Your Credit Score

5 Ways to Improve Your Credit Score

We meet a lot of people with bad credit scores, and we see the effect it has on their lives. We make it easy to get the car you need, regardless of your credit score. But we know that not everybody makes it as easy as we do here at Freedom Cars. So, if you’ve got bad credit and want to improve it, here are a few handy tips.

Pay loans and other debts on time

Most people have some sort of debt, whether it be a mortgage, credit cards or personal loans. Now, in and of themselves, these aren’t bad things. The word ‘debt’ has a bad connotation, but most homeowners with a mortgage don’t really think of themselves as being ‘in debt’. So, remember that having loans and debts isn’t a bad thing, as long as you pay them on time,

Mortgages and personal loans have set monthly payments you need to make, so you need to ensure you’re making those by the due date every month. Likewise, credit cards have a minimum monthly payment that shows on your statement each month. Even if you can’t pay off huge amounts each month, make sure you at least make the monthly repayment to avoid affecting your credit score. Of course, if you can pay a little extra and show a good history of paying down your debts, this can improve your credit score.

Only apply for credit you really need

Did you know that it shows up on your credit report every time you apply for credit? This can be a red flag to lenders, especially if you’re constantly applying for credit and getting rejected. It can also look bad if you have a pattern of taking out balance transfer credit cards to pay off other debts, but you never make any real dent in the amount you owe.

If you do decide to consolidate debts, make a genuine attempt to pay down those debts. This can actually look good on your credit score, but it’s a risky game if you’re just moving debts around. Lenders don’t look favourably on you if you’ve made several credit applications in a short space of time, so only apply for what you really need.

Pay bills on time

Needless to say, paying bills on time is crucial to improving or maintaining your credit score. When you default on bills such as power, phone or internet, it shows up on your credit report. With so many competing costs, it’s hard to budget for everything and bills can be a nightmare. So, one way to stay on top of them is to have a separate account for bill payments. You put money in there every pay, and then there’s always money available when the bills come in. Another alternative is to look for pre-paid services that don’t even have a bill.

Decrease credit card limits

It’s not a bad thing to hang onto one or some of your credit cards. They can be useful in emergencies, and by using one and making appropriate payments, it does show a good history on your credit report. But it’s also helpful to reduce the limits on them. This is because when lenders look at your liabilities and debts, they often take into account the entire credit card limit, regardless of whether you owe that much or not.

Seek help from a financial counsellor

Finally, if you struggle with budgeting or meeting all your debts, contact a financial counsellor. Be wary though, companies who claim they can remove things from your credit report aren’t telling the truth. Find a reputable financial counsellor who can help you sensibly budget without all the wild promises.

Freedom Cars provides a rental system with no fees, no interest, and payments you can manage.