How To Rebuild Your Credit Score In The New Year

If your credit score isn’t great, it can take a fair amount of work to get it up to where it should be. You won’t see immediate effects, it’s more likely to be the result of a long-term change in attitude towards your finances, and creating a more efficient financial system for yourself. Although it won’t be fast, all is not lost Here are five things you can do to strengthen your credit score so that you’re more likely to be accepted for a loan in the future.

Spend carefully

Chances are, your credit score is low because of frequent and unreconciled debts. The first thing you need to do is to pay much closer attention to your finances and personal budget. Keep an eye on your balances at least weekly, if not more often. Pay off your credit cards on a monthly basis, or more often if your credit company will allow it, as soon as you are able. Keep on top of this, and never spend more than you can pay off.

Don’t take risks

You don’t want any potential lenders to think that you are a risk taker, so don’t even hint at risks. Missing regular payments or allowing huge fluctuations between monthly spending could indicate that your spending behavior is erratic. Taking cash advances, or using your credit card at a pawn shop or divorce lawyers could also indicate that you are about to enter financially dubious water, which your card supplier will notice and it could affect their lending in future. You want them to view you as financially and emotionally stable as much as possible.

Pay bills on time

If you’re looking to borrow money, lenders can see when your bills are overdue. The main ingredient for a great credit score is proof that month after month, and bill after bill, every payment is paid like clockwork. Fluctuations show instability, which does not make someone a good prospect for a loan.

Leave old debt on there

As soon as you’ve paid off any debt, it can be tempting to try to get it struck from your record. This won’t necessarily improve your score. Bad debt that has been handled poorly will leave your record in time, and arguing to get it removed sooner can make you look bad. Good debt that has been handled well and in a timely fashion will just strengthen your score. This is why your credit score is important - it shows to potential lenders not just how you are currently doing financially, but also how you have dealt with difficulties within the last few years.

Watch the date

Importantly, keep notes of crucial financial deadlines in a calendar. Missing payment dates can be detrimental, and it’s also important to keep note of when more money will come into your account for lining up repayments. Also, each time you put in a credit application a small dip in your score is created. This lasts a year, so it’s important to make a note of this, so you’re not submitting multiple applications in one year.

Your credit score is crucial to your future borrowing, so if you plan to get a mortgage, a vehicle on finance, or apply for a student loan in the foreseeable future, now is a very good time to start trying to strengthen your credit score.