Pay down balances
If you are need of immediate cash, paying down your credit card and other forms of debt may not be an option. However, if you are planning on borrowing in the future or have the ability to put your loan off for a few months, you can raise your credit scores nicely by lowering your total debt total. In fact, paying down debts is one of the fastest methods for improving your credit. About 30 percent of your credit score and rating is calculated based on your credit utilization ratio. More particularly how much your balances are in comparison to the available credit lines. Your goal should be to try and be within 50% or less of your available limits. But remember, the lower your balances are, the greater your credit score will be.
Organizing your accounts
Your lenders will want to see evidence of your accounts and income for at least the past two years. The more money you make the better, so although you might want to “legally” keep your income to a minimum for tax purposes, remember the more you earn the greater the amount you can borrow. Lenders will also look at how much access to credit you already have. If you have lots of credit cards or a big overdraft facility, they’ll be less keen to lend. If you’ve got a credit facility you don’t need, close the account or ask for the credit limit to be reduced.
Get a pay raise
Lenders look at your income when deciding how much to lend you, so the more you ear the better. With that being said, bite the bullet and ask your boss for a pay-raise.
Limit your going out budget
Lenders do not just look at your income, they also assess your affordability and analyse how you spend your money. They look at childcare costs, bills, living expenses, and lifestyle choices. If you plan to borrow more, reduce your outgoing budget whenever possible. Using a budget planner is a good way to get your spending under control.
Keep accounts up-to-date and in good standing
The way you pay your monthly bills, commonly known as your payment history, is critical to how lenders look at you. If you exhibit a history of paying late, not in full, bouncing checks, etc. then you can expect to be labeled as high risk and therefore will receive a less than desired borrowing amount and term. Any time you exhibit any type of negative activity towards your monthly bills, each occurrence will be reflected on your credit report for seven years. However, these negative marks lose their impact as time passes. So, if you can get your bill paying practices back in check you can expect your credit score to begin to slowly improve after two or three months. And after a year of positive bill paying activity, your score should see a real nice increase.
Steer clear from obtaining any new credit
Ever notice that every time your shop at a major store, when checking out the clerk asks ‘would you like to save 20% today and open a store card?’. It may sound enticing, but don’t do it. If you are looking to apply for a loan in the near future, opening up any new forms of credit are not going to help your credit score. And, in order to obtain these store credit cards, you will have to submit your personal information for a credit check for approval. And as you know, every time you apply for credit, your credit score is going to impact a hit.