Are you struggling to see the light at the end of the month? Does the idea of ever buying your own home feel impossible?
Your credit score is one of the most important ways to measure your financial health. It also shows how responsible you are with debt or credit. The higher your score, the more likely you’ll be approved for loans or credit applications. A higher score rating could also mean you’ll receive lower interest rates when applying for loans.
While 61% of South Africans experienced a salary cut during the pandemic, some had to rely on personal loans and credit cards to help pay the bills. If you’re in a similar situation and you’re struggling to pay off your debt your credit score will be affected.
When you start missing payments your credit score will be negatively impacted. Even a single late or missed payment can negatively impact your credit score.
Here are 5 ways to boost your credit score.
1. Pay your bills on time
Fortunately, you can turn around a bad credit score by paying off your debts.
Your payment history is the biggest factor that affects your credit score, and late payments can stay on your credit record for years.
If you’ve missed payments try to pay the outstanding balance if you can. This may be difficult, especially if you’re already struggling financially. It is a good idea to get your account as up-to-date as possible.
You can explain your financial situation and ask that they stop reporting your missed payments to the credit bureaus. However, creditors don’t always accept these requests. Once agreed, you have to stick to the agreement religiously! Just ignoring the debt won’t make it go away. Worse, for every month that your account is marked as ‘delinquent’, your credit score will be hurt.
2. Micro payments have a big impact
Making frequent small payments, or micropayments, towards your credit card balance throughout the month can move the needle on your credit score faster than paying the full balance at the end of the month.
Keeping your credit card balance low will result in a low utilization rate, which is good for your credit score. This is the second most important factor that influences your credit score. Your credit utilization is the potion of your available credit expressed as a percentage. Using as little of your available credit as possible will be better for your credit score.
The credit bureaus typically look at the billing statement at the end of the month. So if you’ve made instalments throughout the month the billing statement will be less and therefore influence your credit score.
3. Ask for a higher credit balance
When your credit goes up but your credit balance stays the same, your credit utilization instantly lowers, which is good for your credit score. Call your credit provider and ask if they are willing to increase your credit limit.
Be careful when attempting to do this. For every debit or credit request that gets turned down your credit score takes a beating. Be sure to ask them to increase your credit limit without a “hard credit inquiry”. This will ensure that the credit issuer does not do a full credit check.
4. Check your credit report for any errors
One way to quickly improve your credit score is to review your credit report for any errors. Credit report errors are common and you want to report these issues as quickly as possible.
Your credit score will improve once the error has been disputed and removed.
To ensure you have no current errors on your credit report, get a free credit report here.
5. Remove any settled accounts
You may have late payments on your credit report for accounts that have since been settled. If this is the case, ask that these accounts be removed from your credit report. Although the account has been settled this may still have a negative impact on your credit score.
Doing this may take time and effort from your side, but in the end, it could be worth it. You should speak to your credit provider directly to assist you.
Ask them to not only show that the account has been paid off but to remove the account completely. This may have a bigger impact on your credit score.
What if your credit score doesn’t improve?
If you’ve tried some of the tips we’ve mentioned above but you’re still not seeing any results, you may have a bigger problem. If you’re struggling to meet all your monthly debt repayments your credit score will not improve. It may even worsen over time.
Checking your credit report can help paint a clearer picture of what you can do to improve your financial situation. Regularly checking your credit score can help you be more mindful of what creditors see when they examine your credit resort.
To get your finances back on track, check your credit report today! Click here for a FREE credit report.