When banks look at your credit report, they will deny you a loan if it is below their recommended level. However, bad credit ratings has an even more direct impact on you because many institutions peg their decisions on several things including credit score reports. For example, a bad credit score will deny you phone contracts, mortgage, insurance and even employment in some institutions. To address the problem of bad credit loans denial by banks, you need to raise your rating.
The main method of raising your credit score is repaying current loans, and overdrafts. However, there are other unique methods that you can use to raise your credit score faster.
Take a personal instalment loan
Taking small personal loans and repaying them on time will help you to raise your credit score very fast. By considering a small loan, the risk will be lower and most financial institutions will not deny you. Because your interest is built on credit score, you can even take a secured loan and repay as fast as possible. Remember only to use an institution that reports to a credit agency to be sure that your fast repayment will keep raising the score.
Correct errors on your credit report
While the main source of credit reports for financial institutions are credit reference agencies, the reports they give are not always devoid of errors. This is because the agencies are third parties and have to rely on other parties to gather financial details. During the process of gathering credit details about you, the following can make the report contain errors.
- Delay by your financial institutions to submit a loan clearance report.
- Failure by an organization such as a bank, phone company, or insurance among others to remit your progress report. This can be caused by a closure, acquisition, or information security issues.
By getting your report, it will be easy to check all the inconsistencies and have them corrected immediately. Indeed, this should be the first thing to do before applying for any loan or after denial of a loan because of bad credit.
Borrow from your account
Though this is a highly viable option for raising credit score, very few go for it. Ask your bank for a Certificate of Deposit and take a secured loan against the said Certificate of Deposit. Then, put the cash in a high yielding fixed-deposit account and use the borrowed cash to repay the original loan progressively. This will be picked up by the credit reference agencies to raise your rating over time. However, this method will require some initial deposit.
Use your credit card regularly
One of the parameters used to map your credit score is credit history. To get a good history, make sure to use your credit card regularly as opposed to leaving them unused for a long time. This way, your credit company will not give credit agencies notice of closure which lowers credit score. You might also consider using a secure credit card that links to a line of credit and limits spending.