Awakening Africa Magazine

Finance

How to maintain a high credit score with lenders

2 Mins read

A credit score is the determinant of an individual’s financial health and plays a major role on people’s quality of life.

For any lender to consider you for a loan or a mortgage, they will require that you have a good financial history. In today’s world, your financial behaviors can also affect which jobs you can apply and qualify for as some employers are particular to choose people who can prove capable of handling their own finances.

A good credit score shows a high level of discipline and self-control.

Here are a few tips to help you maintain a good credit score.

    1.  Pay your loans on time

It is assumed that if you were able to pay previous loans in time then you are well able to pay any new loan. To help you always pay your loans on time you should set up automatic payments systems and electronic fund transfers (EFT) from your current account. You can set the payment to be in a fixed amount of instalments over a certain period to make it more manageable.

This will not only help to increase your credit score but also ensure you are not charged extra for late payment which makes it even hard for you to clear your loan repayment.

   2.  Excessive use of credit cards

This reflects negatively on your ability to properly manage finances. All credits usually have a limit. To be able to have a good credit record, you need to aim at spending less than half of your credit limit.

   3.  Applying for too many loans

It might seem smart to spread your loan request to several financial institutions as it increases your chances of being loaned the money. However, in reality, this could reduce your credit score significantly. Instead, what you can do is to request a soft inquiry to help you determine your chances of securing the loan before making an official application.

  4. Keep your credit accounts open

Credit scores are determined by the activity on your credit account over a while. Therefore, the more activity there is on the account, the more information there is for lenders to determine whether they should lend you money. To maintain a good credit score, ensure to keep your account actively running and pay your loans in good time.

  5. Monitor your credit

Ever heard of identity theft in credit cards? This happens especially when you make online transactions and are not keen on monitoring your accounts. In case you note any suspicious changes, be sure to dispute them with your financial institution immediately. There are several legit online sites that you can utilize to help you keep track of your credit; make use of them.

Credit scores are not permanent, they are however a reflection of your current financial capabilities. If your credit score is low, you can always work on fixing it by maintaining financial consistency and living within your means. You also need to be responsible about misusing and over applying for loans and consider lending money from family and friends as an alternative.

 

 

 

 

 

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