With bad credit, it is likely that you are no stranger to different methods of trying to rebuild your credit score. While it is true that there are many ways of achieving this goal, there are certain techniques that may prove more realistic as well as more effective for various individuals.
Furthermore, while many of these bad credit improvement practices typically include ways of cutting back on your spending, and generally various strategies of paying off your debts, there are also types of methods of boosting your score that include adjusting the ways you use your credit, even looking to take out additional credit sources.
Here are two different and perhaps NEW ways to improve your credit score.
1) Using your Credit Card More
This first method of improving your credit score relates to the fact that one reason why your credit score might be low is because you have not actually been using your credit card. While it is true that giving your credit card a break and using only cash or debit when you make purchases can be a very good course of action, as it can allow you to cut down on your credit card debt as well as avoid interest charges – it can also however be causing some damage to your credit as well.
With that being said, if you go too long without using your credit card, this can actually negatively impact your score. The reason for this is due to the fact that a significant portion of your credit score is tied to your credit history. If for example, you go for a stretch of time without using any credit, this inactivity will affect your credit score. Therefore you do need to have consistent credit activity to help build a longer and stable credit history.
In the end, it is a fine balance between using credit and not exceeding your credit limit too much. A maxed out credit card will still negatively impact your credit score, although not using your card at all also has the ability to derail your credit score. So as it would seem, perhaps the best advice is to always spend wisely, when it comes to both your cash and your credit.
2) Extending your Credit Limit
One additional avenue for improving your credit score that can be used together or separately from the first tip involves the method of taking out some additional sources of credit. There are actually also various ways of going out this that can help you to boost your credit.
One of these method involves inquiring about extending your credit limit on your current credit card. Of course, with that being said if you are making a hard inquiry on your credit by asking for a credit increase, this is also noted on your credit report. While this can also knock down your credit score a bit, a credit balance too close to your limit will also negatively impact your score. With a higher credit limit balance however, you will have a better debt to credit ratio overall so this may be an alternative solution for you after all.
A secondary method of extending your credit score is to look into other types of credit. For example, perhaps you while extend your credit via a credit card, a home equity loan, or another personal loan of some kind. The reason for taking out another loan or credit source, other than a credit increase on the same card, is because having a range of credit types can also help to improve your credit score.
Overall, a more diversified credit portfolio will help to strengthen your credit and therefore look better to the credit bureaus as well as to future lenders. Since your credit report is critical to your success regarding obtaining future credit, this is a beneficial method to pursue all around.
As you can see, there are certain ‘out of the box’ methods of rebuilding your credit that you might not have previously considered. All in all, as you do seek out different and unique methods of achieving this goal, you can keep these avenues in mind – and remember there are always new ways to improve your credit score, you just have to look around and find what might be the most effective course of action for you and your finances.
