How to Improve Your Credit History

Banks exchange customer’s credit information, so-called credit history, and once you are rated negatively, it influences the whole history. Before we know how to improve bad credit, we should know what exactly bad history is and why it is so important.

What is a credit history?

A credit history is data which details the number and types of your credit accounts, how long each account has been open, amounts owed, the amount of available credit used, whether bills are paid on time, and the number of recent credit inquiries.

What is it for?

Credit history defines your ability to repay credit and presents you as a responsible and solvent client. If your history has any lines about defaults, bankruptcies, judgments, liens, or collections, a financial organization has the right not to provide you with a loan. You need a credit history to get the best possible interest rate and loan terms – the better your history, the lower interest you will be able to get.

Do I really need to do something about poor history?

Only if you want to. There are plenty of creditors on the market that work with that type of client. You always have a chance to take out a loan using our service at the best possible conditions.

The lifetime of the credit history is 2-5 years on average. So if you would like to fix some, you will have to wait or simply follow the given strategies.

Strategy 1

This strategy offers you to focus on small amounts. Take out a really small loan and pay on time. If all you can manage is paying only the minimum, it is fine. A good way of making sure you have paid your loans this month is to set calendar reminders and make payments strategically. That will show creditors that you are good at finances and time management. Taking out not one but several loans will boost your score faster. It is common knowledge that finance companies lend out more easily and willingly than banks, so you may take this chance. This strategy is slow but steady.

Strategy 2

If you have a credit card, pay attention to using it. Spend less than 30% of your limit on any card; the lower the better. Creditors use the 30/70 proportion to evaluate how well you manage your money. For example, let us suppose you have two cards with credit limits of Rs. 200,000 on each and Rs. 50,000 of unpaid balances on one card. Your credit utilization ratio would be 12.5%. In this case, total your debt owed (Rs. 50,000) and then divide that by your total credit limit (Rs. 400,000).

A straightforward way to make sure that your history is improving is to pay several times a month to check your balance on a regular basis, or to pay down before the billing day. It works fast, as here we control two main factors in your credit history – utilization and paying on time.

Strategy 3

One more point in addition to the previous one. Ask for higher credit limits to increase your credit utilization ratio, the difference between the balance and the money spent. You may be granted the higher limit if your income has risen or if you have some years of positive credit behind. This strategy is fast but get ready to prove your salary. As soon as your credit data updates, your overall credit utilization will lower.

Credit misfortunes do eventually fade into the past. You do not need to have a perfect credit history to get a loan today from Cash Space. We provide you with the selection of the freshest offers that meet your requirements. We do not surcharge you, and all of our services are free. Fill out the application and receive money in your account within 20 minutes.