Your credit score is the most important factor to improving your financial situation. Many people overlook the importance of their credit score and realize when it's too late. There are many things that negatively affect credit score such as non-payment or late payment of bills and no credit history. There are some simple steps that will help to improve your credit score.
Make payments on time
If you are a forgetful person it will be beneficial to set up automatic payments. Also, always make payments on time but if you think you wont be able to make it, at least make the minimum payment. If even the minimum payment cant be made be sure to contact your bank to inform them of your situation.
Don’t overuse your credit limit
A general rule of thumb is to not use over 35% of your credit limit. If you use a great amount of your credit lenders see you as a larger risk even if full payments are made on time. Add up all your credit limits such as credit cards, credit lines and student loans and determine how much you have.
No credit is just as bad as bad credit
As an immigrant or a student out of highschool you may think not getting a visa is the best idea in order to stay out of debt. In reality this will actually work against you. Banks will treat a person with no credit history the same as someone with bad credit history if not worst. This is due to the bank not being able to look back at any history and determine if you are a risk or not. If you are worried about exceeding your spending limits get a prepaid visa at a limit which you are comfortable with.
Only have your credit checked when you are serious about buying something
Everytime your credit is checked it goes against your credit as a check. This may affect you negatively as lenders may think you are desperately trying to get a loan. There are hard hits and soft hits on your credit. Hard hits are things like applications for a credit card, mortgage applications, applications for car loans and rental applications. Put simply, any credit check which insinuates you purchasing something will be a hard hit. Soft hits would be if you are requesting your own credit or if information is being updated. Be sure to keep track of when your credit is being checked and limit the amounts it is checked and only apply for a credit check if you really need it. Also, when shopping around different financial institutions be sure to have your credit pulled within a week or two from each other so they look as though they are part of one transaction.
Use all types of credit available to you
Don't rack up all your debt on a credit card. If available, use your line of credit, mortgage, credit card, car loan, and student loans.