Know How To Improve Your Credit Scores

Credit scores have a huge impact on one's ability to engage in various financial transactions

, basic of which is getting a loan from a bank or other lending institutions. It is, therefore, important to maintain favorable ratings.

For people who do not have pleasant grades, there are ways to improve these.

One basic means to do so is to settle overdue debts. If one has enough money anyway, he might as well pay all his matured obligations rather than wait for the lending companies to run after him. Lenders often notify credit reporting companies, which assign the scores of consumers, about payments or non-payments by the borrowers. Positive information about an individual would help improve his image.

For those who are experiencing budget constraints and cannot find ways to service all his debts at the same time, they may find it helpful to notify the creditors about their situations. They can ask for restructuring of their debts, request for extension of due dates, or simply give promissory notes as to when they will settle their obligations.

Creditors appreciate communicating with clients. They have better impression of people who cannot pay their dues on time, but are expressing interest to pay the liabilities sometime in the future than on delinquent borrowers whom they have to run after.

Another practical suggestion is to make a list of all liabilities, including monthly bills and regular amortizations. These liabilities must be matched with the list of incomes (in the form of salary, proceeds from sale of a property, payment for a part-time job, etc.) that one anticipates to earn for a certain period. If the financial obligations are matched with the revenues, a person will have a clear idea of how much excess money he has.

Ideally, a person should prioritize paying all his obligations over non-essential expenditures, such as purchase of unimportant electronic gadgets. If he wants to improve on his poor credit scores, payment of liabilities must be a top concern.

Another tip is to get copies of the evaluation reports prepared by major credit reporting companies in the country. An individual must check for possible errors on the reports, which are used as basis in computing his ratings. Wrong information may lead to lower grades, which in turn may keep one from successfully making a financial transaction.

If an individual strongly believes his ratings are based on erroneous data, he must notify the evaluator at once and request for the grades to be rectified.

Individuals who own credit cards are also advised to make it a habit to pay more than the minimum monthly payment required. Doing so will give a better impression to banks of the card holder.

by: Leo Chu

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