Finance

How to Build a Better Credit Score

In order to gain credit for large purchases, such as applying for a mortgage or applying for a loan to pay for a car, it is likely that you will require a good credit score. For many people a bad credit score can develop in the early years of adulthood and it can be really difficult to get out of the financial rut. In many cases, building away from bad credit takes time, and it can be heart breaking to be refused on applications for even small amounts of credit by traditional high street lenders due to the fact that you have poor credit. There are ways though in which you can build a better credit score methodically over time, and in the meantime there are reputable payday loan lenders that can provide bad credit loans.

Responsible lenders have changed the landscape within the payday loan sphere. No longer are borrowers expected to deal with sky-high interest payments that are sometimes hidden. Instead there is transparency from the very first moment a borrower makes an online application. The process is fast and detailed, with a clear payment schedule laid out, including all interest added to the initial loan amount. That way, even if you have a poor credit history, you can see how much the short-term loan is going to cost you. If you have employment that means you can afford to take out a short-term loan, a responsible lender will use this information to make a decision, rather than just refusing you due to your poor credit history. For some people, without a little bit of help in this way it can be almost impossible to climb away from bad credit.

When looking to build a good credit score moving forward there are few actions and thought processes that you can perform. This begins with a look at your current credit commitments and how they are structured. It may not seem like the sensible approach, but in terms of demonstrating that you are a good regular payer of loans, having multiple lines of credit open for a long period of time is a good thing for building a positive credit score, as long as you are showing that you have the ability to make payments consistently, and to never be late with payments. The credit agencies are usually looking for lines of credit that have been open for longer than a year to demonstrate you are a good payer.

Be careful not to apply for multiple lines of credit over a short period of time. If it is apparent that you have applied for multiple credit cards in the space of a few days, this will be a red flag and potentially damage your credit score in the long run. Always aim to only owe around a third of your overall available credit at any given time. If you are always at your maximum limit this is not viewed favourably, and always keep your debt to income ratio as low as possible to show that you are not scraping by and reliant on credit to live your life.

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