Are poor credit scores keeping you from getting the credit that you need? What would another 20, 30, 50 or even 100 points do for your credit score? Would they create a huge difference while you go to the market to take out a new line of credit? When debts pile up, your credit score suffers as unpaid debts are reported negatively on your credit report. With a higher credit score you can snag a deal on a new line of credit with an interest rate that is within your means. A poor credit score not only bars you from getting new loans at an affordable rate but also impacts your ability to gain employment. The amount of debt that a person owes, composes 30% of the overall credit score and hence you need to be serious about dealing with your high interest debt. Here are some tips that you can take into account when you’re eager to improve your credit score naturally by repaying your debt.
Resolve to pay off debt as soon as possible: This is one of the proven ways to build a better credit score and offers some immediate result in less than 30 days. If this is something that you’re struggling with, you can try repaying your debt burden with the help of the professional and legal options. There are many options like debt consolidation and debt management that you can opt for in order to repay your debt as well as boost your credit score. Use debt repayment calculators in the best way possible as tough calculations can be made easier.
Know which debt to pay off first: If you’re someone who uses the scoring tool by MyFICO, you can clearly get the indication that eliminating your credit card debt is perhaps the best way of improving your credit score. Instead of repaying the larger debt like mortgage loans and auto loans, you can repay your credit card debt as the impact is quite large when you pay off high interest revolving debt.
Make consistent and full-time payments: The best way to be sure about the due date of your payments is by starting off with consistent and full time payments through the automated payment schedule. By signing up for automatic payments, the payments can be automatically drafted from your account on a pre-fixed date. When the money goes to its destination without you seeing it, you can be sure of avoiding late fees and penalties.
Pay off the full balance whenever possible: You should be aware of balance transfers and settlement offers unless the interest rate is considerably less. Once you’re done with paying off your balances in full, you should consider keeping your unused accounts open. Closing the debt accounts that are in good standing can shorten your credit history and this can in turn lower your credit score. Therefore, don’t close your accounts and instead pay them in full.
Review your report and ensure its error free: Keep checking your credit report time to time so that you can prevent your credit score from dropping down. There are times when the creditors report to your creditors but there are some errors in what they report. You have to take into account such errors and dispute them in order to witness an increase in the credit score. Don’t let the errors stay on your credit report as this will unnecessarily drop down your score.
Repaying debt will certainly boost your credit score but make sure you choose the right debt relief option as credit card debt reduction through a debt settlement company won’t have a good impact on your score. Get in touch with a credit repair agency only when you think that you can’t take worthy credit repair steps on your own. They offer services that you can simply do on your own if you’re financially diligent enough to manage your finances.