How to Quickly Improve Your Credit Rating in 2021?
An individual’s credit score is his financial calling card. It contains detailed information regarding one’s financial habits such as lending, debt repayment, loan stability, utility bill payment, and others. This score increases or is reduced, over time, depending on an individual’s financial decisions, which often makes it difficult to quickly boost. This having been said, doing so is not impossible, but it does require discipline and a bit of planning.
Repay Your Credit Card Debt as Soon as Possible
One of the most important things that you can do to quickly increase your credit score is to repay your credit card debt. For most individuals, the winter holidays are filled with large expenses, from buying Christmas presents to paying for holidays and various creature comforts. Those who do not have the habit of saving money over the course of the year, especially for these purchases, may have been pushed to use their credit cards.
Using your credit cards from time to time will not lower your credit score. However, if you do not repay the debt fast, the score will drop. To increase it, you will have to not necessarily repay all of the debt, but enough to lower your credit utilisation ratio under 25%-30%. If your credit card debt is larger than 30% of the total limit of your credit card, and more than two months pass without repaying it, your credit score will be affected.
Furthermore, if your debt is spread across multiple credit cards, keep in mind that you will have to repay at least a portion of what you owe on each of them.
Open a Savings Account and Make Regular Deposits
Opening a savings account, especially at the start of the year, can have multiple benefits. First of all, it will signal lenders that you are in control of your finances and shows them that you would be able to repay any loan that you apply for. Secondly, it will give you a small financial buffer that you can use, and you will also be paid interest by the bank.
Please keep in mind that you do not have to make large deposits, but you must be consistent. Even if you are only able to deposit £100 per month, it will be enough to increase your credit rating.
Cancel Your Unused Credit Cards
Having more than one credit card can be useful, especially during the holidays, however, if you use them all at the same time, your credit score may be affected. Unfortunately, not using them can also lower your credit score.
If you want to increase it, you will have to repay your credit card debt and cancel most of your credit cards. Keeping one or two will not be a problem, however.
Plan Your Loans at the Beginning of the Year
While it is not a quick method of boosting your credit score, it will enable you to constantly increase it, as you take out loans when you need money and repay them. Look at what your major expenses will be this year and establish how much money you will have to borrow. Once this is done, decide when it will be best to apply for the loans.
This will prevent you from borrowing a lot of money at once or getting multiple loans that you will have to repay simultaneously.
As a reminder, make sure that you pay all of your debt and utility bills on time. Utility companies report their activity to credit agencies, which means that you will be able to build up your credit score by paying your utility bills.