Credit score is an important factor for anyone looking for a loan, credit card or financing. This score reflects your ability to pay your debts and is used by financial institutions to assess the risk of extending credit to you. A good score can open the door to better loan terms and lower interest rates, while a low score can make it harder to get credit.Improving your credit score may seem like a daunting task, but with a few best practices you can improve your credit score and get better credit opportunities. Below, we offer five useful tips to help you with this task.
Photo: Agência Brasil 1. Keeping your payments up to date Keeping your payments up to date is essential to improving your credit score. Delays can harm your score, showing creditors that there is no payment plan. Set reminders or set up automatic payments to ensure all your bills are paid on time. Focusing on paying down primary debt, like credit cards and loans, can be quite transformative.
2. Minimize your use of available cash Available cash is one of the most important components of your credit score. Maintaining a utilization rate of less than 30% is ideal. For example, if your net worth is R$10,000, try not to spend more than R$3,000. Regularly paying off your credit card balance can help keep this amount low, thereby improving your credit score.
3. Avoid too many credit applications Applying for credit too frequently can harm your score. Each request raises a question about your credit history, which can lower your score. Plan ahead to apply for credit and avoid doing too much paperwork at once. Choose institutions that offer pre-approval for credit, this does not affect your score.
4. Keep old accounts closed The age of your credit is an important factor in your score. Older, older accounts with a good payment history show that you've mastered credit management. Don't close old accounts, even if you don't use them often. Using these loans for small purchases and paying the full amount can keep them in good working order and benefit your credit score.
5. Check your credit report regularly Reviewing your credit report is important to ensure that all information is accurate. Mistakes, such as misappropriation of funds or accounts that aren't yours, can hurt your score. You should request a copy of your credit report at least once a year and carefully review all the information. If you find an error, contact the financial institution to correct it immediately.
Improving your credit score is an ongoing process that requires you to be careful and frugal. Following these tips can help you improve your score and get better credit terms. Keeping payments consistent, minimizing the use of available funds, avoiding borrowing too much money, keeping existing accounts open, and regularly checking your credit report are key steps to achieving a good credit score. Start using these strategies today and see how your score can improve over time.
READ MORE PROCEDURES in the Minas Gerais Court
