Did you know that credit scores are important to lenders and borrowers? These are the rates that most banks and lending institutions consider before they approve the loan application of an individual or company. High credit scores, which are typically above 8, are good for applicants while the low scores may mean that the borrower has a bad credit record. If you want more lenders to approve your application fast, you need to make sure that your credit scores are good. And to do that, you must follow these simple steps on how to clean up your credit score in 2020.
1) Pay the right amount of principal and interest.
Once you got approved for your first loan, you will receive a document from your lender stating the amount of amortization you have to pay for a month. The interest is also included in that paper. You can use it as your reference when paying your debts. To be able to come clean with your credit score this year, you need to make sure that you are paying the right amount of principal and interest based on the paper you received. If you stick to this step, you can avoid paying high penalties in the next months. So, would you rather pay charges than pay the right amount? Think about that.
2) Pay on your due date.
Never miss a payment. This is a pre-requisite if you want a good credit score. Always pay on your due date so you can keep a good payment record in your credit history. Remember that your score depends on how well you pay. don’t just consider the right amount, take into account the date of your payment too. In this way, lenders will know that you are a good payer and you take due dates seriously. Plus, you wouldn’t want to pay high interest for paying 2 days late!
3) Pay in full.
As much as possible, pay your loans in full and earlier than the due date. This will help you end some of your outstanding loans. The fewer number of loans you have, the more lenders will accept your loan application. Also, paying in full will save you from paying the calculated interest because you can ask the bank to recalculate based on early payment. If you have money to pay for debts, stop prioritizing your wants. Don’t buy a new set of clothes and shoes when you can use the money to get rid of your loans.
4) Prioritize big loans.
Offload the debts with bigger principals so you can skip paying higher interest. If you will prioritize to pay for your big loans, you will be relieved of the pain of paying. You will have more space for new small loans if you are planning to get another. If lenders see that you only have small amounts of debts, they will likely grant you new loans and offers. This step will also help you increase your credit scores as you are getting rid of the big borrowings which are too heavy for your record.
5) Stop applying for a loan.
Getting another loan is not the answer to become financially free. There is no way it can increase your credit scores too. Stopping your loan applications can contribute a lot to your loan management. The lesser loan you have, the more you can control and manage your payment habits. You need to keep in mind that loans are obligations and it won’t make your credit record positive if you keep on adding monthly responsibilities.
6) Use credit repair companies.
Didn’t expect this last step? As you can see, credit repair companies are all over the internet now. Legit credit companies can help you dispute negative debts in your credit record. They will help you get rid of the records that are making your image bad to credit evaluators and lenders. If these negative credit information will be removed, the only thing that will remain in your credit history is the transactions of good payment. It doesn’t hurt to try hiring a company that will fix your credit scores. The fewer the bad sides, the better for your credit scores.