Be sensible- not sensitive

An apple a day keeps the doctor away. A good financial practice a month keeps the bad credit score away. Most people identify bad credit score as a disease in itself. But the real fact is, bad credit score is a symptom of the underlying bad financial practices. If you have a very healthy financial management plan, there is no place for bad credit score in your book of financial history.

Here are some basic ground rules which should be followed in order to clear a bad credit history report.

•    Do not roll over your payments- Never roll over your loans. Never. Period. Make “paying the loan off” as your priority of the month and then budget the rest of your expenses. Practising this consistently will not only increase your credit score but also will cut your loan debt.

•   Pay your bills on due date - A simple [hard] yet powerful fact in the book of good financial practices. If watched closely, most of us will have the money to pay on time but procrastinate till the last minute and sometimes end up paying extra fee for nothing. An act of laziness, a fact on your credit score.

•    Do not use your credit card often- Never use your credit card for shopping. Leave it at home before you step out for shopping. Use credit cards only for online bill payments. Also do not withdraw cash from credit cards. Credit cards running over draft limit will eat up to 70 points of your credit score.

•    Take loans wisely: In order to build a good credit score report, take small loans which you can pay off on time. Also remember that each time you “apply” for a loan, 3 points are plucked out of your credit score report. So apply for a loan to different lenders all at the same time instead of applying in different periods. This would mean you are applying for one loan and you lose only 3 points overall.

•    Never close loan completed accounts: Most people have the habit of closing the account once a loan is completed. This will reduce your credit points as there will be no history about your past loan transactions, hence your loan repayment credibility will reduce. This will make lenders to hesitate before they offer you a loan in the future. Blatantly, a weak credit score report.

Trying out these simple steps will definitely make a great patch work to your existing bad credit score report.

Did you find this blog useful? Share your thoughts and experiences with us. It would be great to hear from you.