In life, fewer things are as precious as an excellent credit score.
With a score of 750 and higher, banks and other lenders will be willing to do business with you. You will not only qualify for mortgages and other loans easily, but also secure them at low interest rates.
Yet, over 6 million of the 16 million+ credit-active South Africans have bad credit and are unable to enjoy these benefits.
If you’re among the many people with bad credit, it’s high time you fixed it. And to get you started, we’re sharing tips on how to increase your credit score fast.
Know Where You Stand
Terry Pratchett once said, “… if you don’t know where you are, then you don’t know where you are going…”
There is no better place to apply his wisdom than here. When your goal is to build credit, you must know your current score.
Begin by getting a copy of your credit report from any of the four leading credit bureaus in the country. Although your score might vary from bureau to bureau (different creditors report to different bureaus – sometimes all of them), the difference won’t be significant.
Once you have your current score, set a realistic target. If you are at poor, for instance, focus on jumping to good, not very good. Credit building is a step by step process.
Reduce the Amount You Owe
Falling behind on loan payments is the #1 reason people have poor credit scores.
It then makes sense that staying on top of your payments and reducing the amount you owe is one of the most effective credit rebuilding strategies. If you’re not able to service your loans currently, approach your lenders and work out a new repayment plan.
For instance, a lender might be willing to lower your monthly payments and increase the terms of your loan if it’ll enable you to start repaying. As you keep settling the loans, your efforts will show on your report, and the result will be a higher score.
If you have the money to pay off the loans, do so. The lenders will notify the bureaus, who will then adjust your report accordingly.
Start Servicing Inactive Bank Accounts
It’s not uncommon for people to open an account with multiple banks in town, and its to see why.
Often banks offer enticing account benefits — a small cash bonus on deposit for first-time customers, for instance — which lure people into needlessly signing up. Sure, you have the liberty to hold as many bank accounts as you wish, but if you let them lie dormant, your credit score will be the biggest casualty.
If you have dormant or inactive bank accounts, start servicing them. The greater the level of transactional activity, the stronger your credit will get. Banks routinely send such information to credit bureaus.
That’s How to Increase Your Credit Score Fast
There are a couple of reasons you might want to learn how to increase your credit score fast. Maybe you’re looking to snap up a home or secure capital to start a business. Or you just want to feel good about it.
Regardless of your reason, it’s possible to boost your credit score quickly. Follow the tips we’ve fleshed out, and keep reading our blog to gain more personal finance insights.