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The credit score of an individual is the prime factor that determines their credit worthiness. Therefore, if you have a low credit score, it poses a huge problem while applying for loans or credits from banks and credit card companies. Loan providers view low credit score in a negative light and it impacts their decision while sanctioning the loan. A low credit score can lead to outright cancellation of the loan or it can end up in you paying a higher interest rate than you would have under normal circumstances.
So, it is in the interest of every person to maintain a good credit score and it is not at all difficult. You will just have to do a little homework and keep an eye on your overall finances. Here are ten ways to help you achieve a positive credit score.
1. Clear your bills on time - Delayed payment is the biggest cause of low credit score and it happens mostly because you neglect the deadline. So, make sure all your payments are made on time and you will definitely see a rise in your credit score.
2. Maintain a low credit card balance -A credit card balance that is more than 35 percent of the total credit limit is not a healthy balance for credit score. It reduces the credit points even if you are regular with your payments and thus, you should keep an eye on this balance and ensure it is below the prescribed limit.
3. Fix your credit reports - The credit card reports carry all the details about your loans and credits but they are not error-free. So, review your credit reports regularly and rectify the errors, if any, from time to time.
4. Do not close unused accounts - If you have an unused credit card account with a positive payment history, it makes sense to maintain it even if you are not using it. This is because such accounts lead to additions in your credit score.
5. Get an installment loan - An installment loan such as car loan, personal loan etc. brings about an enhancement in the overall credit score. So, if you do not have any such loan, you may take one. Go for one that you can repay on time.
6. Get a credit card if you have none - Having a credit card and using it at long intervals also brings about an improvement in credit score and thus, if you do not have a credit card, consider opting for a secured credit card and ensure that the card reports to all the three credit bureaus.
7. Request some goodwill from lenders - You can get concession from your creditors or they may also write off a few late payments if you have been a responsible customer. However, to get the benefit, you will have to make a written request.
8. Settle old disputes with lenders - You should settle any old dispute on time. Report to the credit bureaus about the irregularity and you can improve your credit score by a remarkable degree.
9. Apply for smart loans - Smart loans are those loans that have a reasonable interest rate i.e. they are in tandem with the market reality. Such loans do not create any repayment issues and therefore, you should look for them and avoid those that offer attractive rates.
10. Negotiate for interest rate - It is always beneficial to negotiate your interest rates with your creditors during times of financial crunch. You should resort to this method as it may help in bringing down the rates.
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