Credit score is developed to record your financial activity and give a conditional mark to your behavior. If the score is high, it means you tend to make timely payments and approach other money-related steps carefully. The problem with this scheme is that it doesn’t take into consideration situations when you make a financial mistake unintentionally or that you have no option other than missing the payment.
If you have a credit score lower than 580, then you are likely to encounter serious problems when you try to take out a loan. Of course, it makes you more vulnerable to emergent expenses compared to those with good and excellent credit.
We suggest a couple of recommendations to have a better picture of credit score.
This is a simple but yet effective solution because it plays a decisive role in calculating your credit score. If you see any obstacle for paying the bills on time, it’s better to ask your friends for cash, or if it’s not an option, take out a loan until you get your salary, so that it doesn’t lower your credit.
The amount of money you owe is also important because in case you have too much, the lenders will think you can’t handle anymore. So, try not to take one loan to pay off the previous one not to fall into a circle of debts.
You may think that different credit accounts will improve your overall credit history but in fact, it will be confusing for you to manage all of them, so don’t risk and make things even worse.
If you have a debt, do everything possible to eliminate it, let it be little by little, but whenever you can pay even a small part of it, do it. It’s better to put aside all the purchases that are not a must and save as much cash as you can. If your bad spending habits led you to have too many debts, then only good spending habits can save you from going deeper into the problem. It’s better to spend some time living on a tight budget, but be able to live debt-less finally.
Another piece of advice to keep in mind is not to take a loan if you aren’t sure you can pay, because especially in case of quick cash loans, the interests are relatively high and if you have late payments they get even higher which can damage your budget and of course the credit score.