Low Credit Score? Ultimate guide on how to increase Credit Scores.

Is a low credit Score getting you down? If you are struggling to qualify for credit facilities and your credit score is not as respectable as you would like it to be and you are questioning what can get done about it, then, you have landed at the right article. This short feature is a list of pointers you can follow to increase your credit score and fix your creditworthiness.

Before we get into our life-changing recommendations, we first need to explain what a credit score is and look at why you have a low credit score. Each credit-active consumer generates a credit score.

Credit Score, what is it?

A credit score is a three-digit number which gets calculated by a credit bureau. In South Africa, we have over 20 credit bureaus, but the main credit bureaus credit providers use is Transunion, Experian, Compuscan and XDS.

This all-important three-digit credit score number indicates the likelihood for a consumer to repay the credit facility. Having a high credit score means you will be a low-risk applicant and will get approved for credit. Having a low credit score means you are a high-risk applicant and will immediately get declined for credit.

**Why do I have a low credit score?**

A consumer’s credit score gets affected by their financial habits. The following factors affect a credit score negatively:

Maxed, out credit facilities. Example: credit card reflects a credit limit of R10 000, and the balance reflects R10 000. This example will be a sign that the consumer is living on credit.
Attempting to get approved for multiple credit facilities in a brief period.
Many one-month loans. These types of payday loans or one-month loans are bad for credit score.
Missed payments. These missed payments will have devastating adverse effects on a credit score.
Collections information. Example judgments, defaults, trace alerts and notices.

Now that we know what a credit score is and why a credit score is low, we can now look at our suggestions to increase a low credit score.

Step 1: Do not skip any payments.

When attempting to fix your declining low credit score, it is crucial not to skip any of your current monthly account payments. You will never be able to increase your credit score if you miss even one payment. A missed payment will be recorded on your profile, and it will remain visible for five years. Credit providers will have access to this historical information for up to 5 years. A skipped payment will have negative consequences on your credit score. This negative indicator on your profile will be counterproductive in your quest to increase low credit scores.

Start by consistently and without fail pay all your accounts which are due on time. On clothing, credit card and revolving loan facilities pay at least a little bit more each month. On these accounts also ensure that you do not spend more than 50% of the available credit limit.

Step two: Evaluation.

You ought to evaluate your financial situation and credit report monthly. This evaluation is crucial to establish how much debt you have. With this information, you will be able to plan to pay off the outstanding balances. By doing this, you might discover that your financial situation is not as bad as you believed it was.

Step three: Stay away from sequestration.

Whatever you do, try not to apply for sequestration or administration processes. If you struggle to maintain your monthly repayments to credit providers opt for debt counselling instead. Repairing and working on a low credit score is far more challenging after you have agreed to get placed under sequestration. It is crucial to make every attempt to find an alternative to get help in dealing with debt. Some companies will make overindebted consumers believe that the Sequestration process is a debt cure-all process to sign you up. The sequestration process will end up being a huge financial mistake. These two processes will have you blacklisted on the credit bureau for ten years. For more information about the consequences of being sequestrated please click the following link - Consequences of sequestration.

Step four: Using a credit card or clothing account to boost a low credit score.

Another effective way to increase and boost credit scores is to pay for some of your daily living expenses with your credit card. At the end of the month, pay off the credit card in full. Do the same process for a couple of months and see your credit score climb. Remember not to exceed more than the 50% credit limit.

Step five: Supplement your income.

Our next suggestion is to increase your income. Do what you can to increase your earnings levels to assist with paying off debt. This boost to income will also increase debt to income ratios. Credit providers rely on your debt to income and play an important part in most credit scoring modules. If your debt to income is high, we recommend paying off accounts to improve this ratio. The best way to do this is to supplement or boost income levels. The following list is some examples of how you can increase your income.

Register to do online paid surveys. There is a whole list of websites who will pay you for your time and feedback on surveys.

Become a part-time uber driver if you have a suitable vehicle.
Sell any unwanted goods you do not need on Junk mail, Olx, Facebook and Gumtree. Please ensure you follow the safety guidelines when dealing with private buyers.
Start a small business on the side to generate extra income.
With the extra income, you need a disciplined approach to pay off debt. Use this income to pay off debt and nothing else until you have reached the ideal debt to income ratio.

Step six: Prioritize in removing listings.

Number six is to make sure your credit report is free from any negative, or adverse listings. These listings include defaults, court judgments, trace alerts and legal indicators. These listings have a high impact on credit scores. Get these listings settled as a matter of urgency and liaise with all the bureaus to get it removed. Our credit clearance service may be able to assist if you get stuck or need professional assistance in getting these listings removed. Also, read the following articles to assist you with adverse listing removals: Ultimate Credit score Guide, Blacklisted, Creditworthiness, credit scores and Affordability and 20 Essential Tips for Blacklisted Consumers to get out of Debt

Sources - Other good reads

Step Seven: Adopt good habits.

The last step is to develop and adopt smart spending habits. The best way to adopt a sound spending habit is to draw up a budget. A budget should accurately reflect the exact income and exact expenses. The expenses must be accurate to succeed. A carefully planned budget will assist you to live within your means. Having a habit of living within one's means will ensure you can avoid the risk of getting overindebted.

Step 8 – Save money wherever you can.

To be successful in your quest to increase credit scores, you need to reduce debt. You will also need to live within your means to make a difference to your financial standing. Budgeting will be crucial to this quest. Following a strict budget will be beneficial for your finances and credit scores. Besides sticking to a financial budget, you should also live every day looking for opportunities to save money. It is advisable to start forming a habit of making mindful choices when using your money.

We have added a list of opportunities where you may find our top cost savings recommendations.

The first thing is to deal with the excessive costs of electricity. Adjusting your geysers thermostat down to a temperature of 55 degrees will save you money on your account. Another way to save on your monthly account is to cover the geyser with a geyser blanket. The blanket will act as insulation and will stop the geyser from heating up unnecessarily. dealing
This suggestion is not a liked one, but you should consider cancelling your DSTV service. There are cheaper alternatives, for example, Netflix and Showmax for a fraction of the cost. If you are skeptical, to make this change, ask yourself how much time do I spend in front of the television? You will surprise yourself at the answer.
Consider cancelling any newspaper and magazine subscriptions. Not only will it be good for the environment, but you will also be able to get your daily news from the web all for free.
If you rent a property, consider finding a cheaper place to rent. This change may save you thousands of Rands each month. When looking for a more affordable property to rent, remember to make sure the levies will cost you less.
Avoid junk food and fast-food outlets or at least consider eating out less.
Eat at home before you go to the movies. Cinema snacks can add up to being expensive for what you get.
Cut down on smoking and drinking. Not only is this a bad habit for your body, smoking and drinking also causes financial stress on your budget. Once you manage to cut down or stop entirely, you will start to see an improvement in your finances.
Consider cutting down on red meats and replacing it with chicken. Chicken is cheaper and healthier.

Final Thoughts on how to raise your low credit score:

Track your credit score. Subscribe to all credit bureaus for a minimal fee and work on problem areas as they come up.
Set up a financial budget and try not to deviate from your monthly spending plan.
Set up debit orders to pay accounts and use reminders to remind you of making payments. Setting up these reminders will assist you in making payments on time if you opt to pay electronically.
Avoid payday or one-month loans. These accounts will harm your credit score and creditworthiness.
Work hard on reducing debt levels. As you work on decreasing account balances, your debt utilization ratio will improve and in turn, boost and increase credit scores.
Avoid unnecessary credit checks and only apply for new credit facilities when necessary.
Request increases on current credit limits on your credit card and clothing accounts without maxing out the facilities. A higher credit limit will increase your credit utilization ratio and again will improve your credit scores.

The purpose of this article is to show you that you do not have to be a financial expert to have an excellent credit score with all the bureaus. You should find it a bit easier now to increase a low credit score. You can do a lot of simple things as advised above. The most important fact is that you start now and keep on going at it until you have reached the desired credit score level.