How Do I Improve My Credit – Explained

For a long time I asked myself how can I improve my credit.

Talk to your lenders

It can be tempting to ignore your lenders if you are struggling to meet your repayments. This is the worst thing to do as the lenders will have no option but to start legal proceeding that will show up and impact on your credit score. You will find that your lender will most likely be more than willing to give you a bit more time to pay or is willing to restructure your repayments to help you through a sticky patch. If they do not know you are having money problems they will not be able to help you.

Cut Any Unnecessary Spending

Over the period of a month write down every cent you spend. Categorize each item you buy into categories such as eating out, socializing etc. You will soon be able to spot areas where you can easily reduce your monthly spending. Common areas are take out coffees, smoking, clothes shopping and some forms of travel such as taxis. The moral is to think about your spending and work out if you really need what you are about to buy.

Refinance to improve your credit

One of the easiest ways to improve you credit is to refinance your existing debts. There are several reasons why refinancing can help you improve your credit. First of all you maybe able to lower your monthly repayments by transferring short term debts on high interest rates such as credit cards or overdrafts on to longer term, cheaper debt such as loans or a remortgage. This will allow you to make you payments or even increase the amount of debt you pay off each month as you will be paying less interest charges.

Another way refinancing can help you improve your credit is a little hard to get your head round. One of the measures that goes to make up your credit score is your ratio of debt to available credit. As a result you can take advantage of this by refinancing and not fully utilizing your credit limits. The most common way to use this technique is to take out a new credit card and not use it.

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