Your credit score plays an important role in your overall financial well-being and success as it helps lenders to decide if they should lend money to you. Before we go any further, let’s take a quick look at what a credit score is and how it gets factored into your finances.
A credit score is a number based on an analysis of your credit file, that gives lenders a snapshot on how responsible you are with your money and your credit. For example, if you are thinking about taking out a personal loan or purchasing a home, lenders will look at your credit score to see if you’ve been responsible paying your other debts over time. If there are late payments, or other negative items on your file, it will make your score go down, resulting in either loan denials from lenders, or an approval with a higher interest rate. This can cost you more money now and across the life of any loans you may have.
Now that you know what a credit score is and how it can affect your finances, let’s look at 4 ways you can start improving your credit score:
Debt management helpIf your debt continues to spiral out of control even after applying these points, it may be worth considering a debt agreement. A debt agreement is a legally binding agreement between you and your creditors to provide a clear pathway out of debt. With a debt agreement you can reduce the total amount of your debt, freeze all ongoing interest and set terms you can afford to repay within your budget. It will be listed on your credit file, but if you’re at the point where lenders will no longer lend to you, it may be the solution you need. For more information read: Debt Agreements – what you need to know.