According to Investopedia, “A credit score [or credit rating] is a three-digit number that rates your creditworthiness. The higher the score, the more likely you are to get approved for loans and for better rates. A credit score is based on your credit history, which includes information like the number of accounts you have, total level of debt, repayment history, and other factors. Lenders use credit scores to evaluate your credit worthiness, or the likelihood that you will repay loans in a timely manner.”

Why do credit scores matter?

Lenders use your credit score to determine whether to approve you for things such as personal loans and credit cards ― and what interest rates you will pay. A credit score is made up of (and influenced by) different factors, namely payment history, amounts owed, length of credit history, type of credit and new credit. Fortunately, you can improve your credit score to secure better loan terms.

5 ways to improve your credit score:

1. Know your numbers

Getting a copy of your credit report will give you an in-depth look at your credit health and your credit score. This is an important starting point, so that you know how to plan your next financial step. You can visit your nearest Cashies™ store to get a free credit report.

2. Fix your negative listings

If you have negative listings – like unpaid debts – it is important to correct these, either by paying what you owe (in full) or making arrangements with any creditors. In addition, if you notice any errors, you should contact the credit bureau immediately to rectify it, so that you don’t have a black mark against your name unnecessarily.

3. Reduce your credit balance

As your outstanding debts can drag down your credit score, even if you repay your loans on time, a high credit balance (i.e. too many loans) will lower your credit score. Lenders treat your credit balance as a risk assessment. Therefore, try to lower the amount of loans and debt you have as much as possible.

4. Close your unused store cards

Unused store cards (and credit cards) add to your overall debt amount ― which carries a high risk ― and therefore brings down your credit score. If you aren’t using a store or credit card anymore, close the card to reduce your outstanding credit balance.

5. Pay on time and in full

When you pay your installments late (or only partially pay them off), it signals to the credit bureaus that you are unreliable, lowering your credit score. Always double check with any loan you take out that you are able to repay the full amount, on time, to avoid further financial complications.

Other things to remember:

-You can make arrangements with lenders. This will allow you to make reasonable, realistic payments every month ― instead of stressing yourself out, trying to make large monthly loan repayments, which are actually just keeping you in debt.

-Improving your credit score takes time. If you have a low credit score, it could take a year or two – maybe longer, depending on how much debt you have – to improve it. But your primary focus should be to remain focused and take the small steps you can, in order to improve both your credit score and your overall financial wellness.

You can get a free credit score from us at any time, at one of our stores. This will help you to understand your financial situation and empower you to know your status and make changes where needed.

To find your nearest Cash Converters’ store, click here.