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Credit score improvement techniques

By Janet Lacey
Published: Friday, April 30th, 2010

If you have been living in oblivion and were only recently bought back to planet earth after reading your recent credit report, then it is possible that you might be quite frustrated. After all, a credit score is something that is going to be associated with you for the rest of your life. Hence, you might want to be careful with it and ensure that you maintain a good score so that creditors will have confidence in giving loans out to you. Here are some strategies that you could potentially use in order to maintain a good score and get loans approved right away.

Negotiate and haggle without shame

If you are in money problems, don’t hide it. When you apply for loans or for credit cards, make sure that you are getting the best possible rate for that particular card or loan. Since rates are usually negotiable, you must try and fight your way into getting better terms before it gets too late. After all, these are the things that are going to determine how you are going to be in the future. Don’t get frustrated in trying to bargain for better rates. Think about how it will affect your credit score when you are not able to pay the debt back due to high interest rates.

Avoid loans

If you are having problems paying back old debt, why would you want to bring on more debt? Some people do what is known as “loan chasing” where they get a new loan to repay the old one. This will continue to the point when you amassed a much larger debt than what you originally had and no bank will be ready to provide you with another loan again. If you truly want to see your credit score improve, then don’t add on more loans and instead work diligently towards closing the old loans that are already open.

Prioritize with interest rates

When you are paying back debt, it would make sense to first close the ones that have astronomical interest rates so that they don’t keep accruing and building over a large period of time. Instead of simply trying to close as many loans as you can, it would seem wise to first close the ones that have a very high interest rate.

In this way, it is possible that you might have a chance to not get penalized heavily by the interest rates of the more expensive loans. Remember that defaulting on these payments will again cause a dent in your credit scores, which is the thing that you should be avoiding in the first place. Thus, be smart and try to not get too much interest on your principal amount.

In the end, just stick to these practices and your credit score is bound to improve. At first, it might seem like nothing is changing, but give it time and you will soon realize that everything matters and even the smallest of things done differently counts in the end. Most people want to see results right away but this is not possible and you will have to be patient with the whole process.

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