As the World becomes ever more digitalized, more and more companies are using data about us to make decisions about all kinds of things. These days, your credit score won’t just affect your ability to obtain credit, it will also affect your employment opportunities, the cost of your insurance and a host of other things. Improving your score is crucial to a successful existence in the modern world. Thankfully, it is not that difficult to do, and there are a number of simple steps you can take to make sure a bad credit score does not affect your life.
Don’t avoid debt altogether
The most unfair thing about credit scores is they don’t reward sensible, frugal people: one of the principal ways credit agencies decide whether to lend you money is your credit history. Thus, somewhat unintuitively, you are less likely to be lent money if you have lived within your means for years, than somebody who has borrowed lots of money and paid it back. To have a good credit score, you must have a credit history, meaning you have to borrow some money and prove you can handle it responsibly.
Don’t apply for credit too often
Every time you apply for credit, it leaves an impression on your rating, which lasts a year. This means you have to be careful about applying for credit, because even if you do not want the credit, and were simply testing the waters, it may still reduce the chance of you getting credit in the future. There are plenty of services which offer soft credit searches, and will pretty much tell you whether you will get the credit or not, without leaving an impression on your credit report, which may hinder your chances in the future.
Don’t suddenly change your financial behavior
Sudden, erratic, changes in behavior are a massive red flag for credit reference agencies, as it immediately makes them suspect something is wrong. If you go from no debt to asking for a colossal unexplained loan, then they will be suspicious; as will they if you go from consummate bill payer to person who suddenly needs credit to make ends meet. The more predictable you look to credit agencies, the better your score will be: so, try to change your finances gradually and look as sensible and boring as possible (even if you are not)!
Stay away from bad debt
Credit cards, high-interest loans and pretty much any loan from a source with a bad reputation, will lower your credit score. Financial companies will assume if you are using credit from bad sources, then you cannot get it from good ones. Leading to them rejecting you without even knowing the reason. So, when possible try to use reputable companies because it will mean other companies trust you more.
Many people have false entries on the credit record, which severely damage their score, for absolutely no reason. The remedy to this is very simple: check your credit report every month or two and make sure that you recognize every entry on it. Don’t allow your life to be ruined by fraud or the incompetence of others. Checking your credit score couldn’t be easier in the modern world, with a whole host of applications such as Credit Karma (all three scores available, two at no additional cost) and Mint (an Intuit program), both of which allow you to look at your score for free.