You might’ve heard it a million times that everyone should keep a good credit score, but you may be still not fully clear on what does that means or why do you need it.
A good credit score will facilitate so many things and influence many procedures. For example, it would come in hand in an unexpected financial crisis when you desperately need a loan, or when you’re looking to rent a place. Your credit score will provide you with validation and will allow lenders or landlords to trust you based on your credit history and other factors.
Now to move to the point you’re here for
Your first step is understanding where you stand and what is your current financial situation.
You should do so by requesting a credit report, if you’re in Canada, you can obtain free credit reports from Equifax Canada and TransUnion Canada.
This step is essential for you to monitor and improve your payment history. That’s why you need to fully understand and familiarize yourself with this information.
Once you’re more well informed about this, you need to review your reports for errors and start developing a payment plan.
Pay your bills on time or at least pay the minimum amount, and consider automatic payments.
If it’s hard for you to remember to make your payments, a good thing to do is to set up automatic payments for your debts and loans. This way you won’t have to worry about forgetting, or spending so much on trivial things while leaving your bills piled up.
Avoid keeping a high balance on your credit cards.
Keeping a low credit card balance is very important. Consider staying below 30% of your credit limit to boost your credit score. Put your focus on repairing credit in accounts that are in danger of becoming past due.
The bottom line is, a bad credit score will create many obstacles for you. For example, it would let creditors and lenders charge you higher interest rates because it will indicate that you’re a risky borrower and that you will default on a credit card or loan obligations. This will create many problems for you, you might be denied employment, have to pay security deposits on utilities, pay higher insurance premiums and many many other similar problems with services you need in your life.
For more, visit Eastern Loans.