After receiving your credit report, you find out that you have a low credit score. What should you do? How can you work on improving your rating? Here are some tips:

Timely Payments

Did you know that making your payments on time can raise your score by as much as 30%? How conscious are you about submitting payments on your due date?

One way to avoid late payments is to set up an automatic payment system with your bank. Hence, payment to your creditor will be automatically sent by your bank using the available funds in your savings account. Prompt payment for at least six consecutive months can significantly raise your score.

But what if you cannot send payment on your due date because of an emergency? In this case, you would want to get in touch with your creditor immediately. Let them know why you cannot submit as expected and request for an adjustment in your deadline. Many creditors will oblige if you talk to them about it.

Keeping old accounts

The length of your credit history is an important factor in your credit report. This is why closing old accounts can damage your score. Be careful about cancelling old credit cards, especially the ones that you first had. If an old card charges a high rate or expensive fees, use it only for small purchases. Avoid the interest rate by paying your entire balance each time.

Setting your credit limit free

How much of your credit limit do you use? Financial experts advise not using more than 40% of your available credit. Why? Creditors may get a negative impression if your credit report shows that you often maximize your credit card’s limit. You may be considered as a high risk borrower and potential creditors may be hesitant to approve your application.

Add to this, maximizing your credit line puts you at a greater risk of bad debt. To avoid this, make it a habit to pay off your credit card balances in full before charging new purchases. It will also make a big difference if you will create a list before shopping with your credit card.

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4. Do You Really Need a Perfect Credit?
5. How to Get Over Your Debt Problems Effectively