As a business or an individual, having a good credit rating can open or close a lot of doors for borrowing money. As an individual, you may want to simply access a credit card or store card, so that you can make purchases for the higher cost of goods and pay them off over several months to save your savings. It may also be that you need a few thousand pounds or dollars for an emergency, and you don’t have the savings to cover it. In these cases, having access to credit is vital and can cause serious issues if you’re not able to get it. As a business, accessing credit is also very important. At the start-up phase of the business, you may have high variable costs to set up a physical location or order stock. To get started, you may need to get a secured business loan.
You’ll find that cash flow is an issue, which is common for many companies, and that you don’t have the cash in the bank to make a payment at the right time. Again, having a good credit rating will mean you can get a short-term loan until invoices are paid. As a start-up business in particular, if you have no credit, then this can be difficult, which is why companies like paymentcloudinc.com exist. These companies specialize in lending to ‘high-risk’ businesses. This is great to get started, but you’ll find that with a low credit score comes high interest rates and limited options for borrowing. By increasing your credit score, you’ll be able to access much lower interest rates with better payment terms. You’ll also be able to borrow more money, which is useful for any emergencies, as mentioned above.
Apply For Credit Infrequently
The first step to keep your credit score healthy and maximize your borrowing potential is to only apply for credit when necessary and to keep these applications to a minimum when possible. Every time you apply for credit, from a credit card to a loan, a credit check will be run against your name. This is true even with easy credit cards, so make wise decisions when it comes to applying for credit. If your name appears often, it may be a warning sign to lenders that you’re over-reliant on borrowing and will suggest that you could be a risk. If you’re applying for credit, try to only apply once every few months at most to prevent this from happening to you.
Audit Your Credit Accounts
Similar to the above point, you want to show you’re not over-reliant on loans to operate. It’s good practice to review your credit accounts every few months and remove any that you don’t need. This may be credit cards that you opened for a good rate that has run out, for example. You can also consolidate several smaller loans into one. This also has the advantage that you don’t have to manage several loan payments coming out of your account each month, and may give you the option to refinance and get a better overall rate.
Keep Old Credit Cards Open
Moreover, keep your old credit cards open to maintain good credit. When you close out a credit card, it only remains on your credit history for about ten years. If you leave your old accounts open and stay up-to-date with all payments, you can continue to improve your credit for more than ten years. In addition, individuals who close out their old credit cards decrease their available credit. The amount that was on your old card disappears from your combined amount when you close it. In turn, you also decrease your threshold. Avoid these outcomes by keeping old credit cards open. You will successfully impress lenders with your score.
Consolidate Credit Cards
You can also maintain a great credit score by consolidating your credit cards. This tactic allows you to reduce your balances. Many individuals use this method to clean up credit scores quickly. It particularly benefits credit card holders who struggle with using their cards appropriately. When you have multiple balances, it is easier to forget how much you are overusing your cards. More so, you can easily forget to pay one of your bills when they are all separate. Consider consolidating them to simplify the process and improve your debt management. Then, you can impress lenders with a great credit score.
Make Your Payments On Time
Finally, make your payments on time to keep your credit score up. The best way to ensure that you do not miss a payment entails staying organized. Keep all of your credit card bills in one location. Another great tactic is to set reminders on your phone for when the payment date is approaching. You can also schedule automatic payments online to avoid missing a date. Use these tactics to make your payments on time and ultimately receive the capital you need from lenders.
Businesses and individuals alike need loans to purchase expensive items. To qualify, you need to keep your credit rating healthy. A great way to achieve this is to avoid applying for credit frequently. Audit your credit accounts to show that you are not relying on loans as well. Additionally, you can keep old credit cards open to maintain a good score. Consider consolidating your cards and always make your payments on time. Follow this advice to keep your credit rating healthy so that you can impress lenders.