We need a healthy credit score to benefit from lower credit card and loan interest rates, higher chances of loan and rental approval, and even to enjoy better car insurance rates. However, all it takes is one mistake, such as defaulting on a loan payment, to see your credit score tumbling. If you’ve found yourself in this position, you might wonder whether it’s possible to improve your credit score to enjoy these benefits once more. It is, but it might require you to take some of the following actions.

Purchase Tradelines

Tradelines are lines of credit that credit reporting agencies list on your credit report. They are essentially activity records and detail your revolving accounts, instalment loans, and open accounts. When you have poor credit, you can purchase an authorised user tradeline and piggyback on the positive financial history of someone else. As a result, you might enjoy a better FICO score, higher chances of securing a credit card or loan approval, and potentially lower loan interest rates.

Avoid Making Late Payments

Your payment history forms a core part of your credit score, so it makes sense to focus on making sure you pay your bills on time. Sometimes, this can be as easy as setting up payments to leave your bank account automatically, creating a filing system to keep track of your monthly payment obligations, and setting alerts, so you remember to pay your bills on time. If it helps, you might also consider paying your monthly bills with a credit card and paying that balance in full each month to avoid interest charges.

Improve Your Credit Utilisation Rate

Credit utilisation describes how much of your credit you’re using at any given time. For example, if you use all available credit, you might have a lower credit score than someone who only uses 10% of their credit. An excellent rule is to keep your credit utilisation rate at 30% or less of your limit. The lower it is, the healthier your credit score might be.

Build Credit History

Sometimes, poor credit history isn’t what’s stopping you from accessing the most competitive financial credits. Instead, it’s a lack of credit history. If you have a thin credit file, consider taking advantage of credit programs that allow you to collect financial data that might not otherwise be added to your credit score, such as utility bill payments and your banking history. These show you pay your bills on time and might be used as evidence by financial institutions of your reliability if you lack good credit in other areas.

Consolidate Your Debts

Whether you have debt relating to student loans, medical bills, personal loans, or something else, you might soon find the multiple payments overwhelming. Default on one, and your credit score can be in trouble. However, you might be able to start improving your financial situation and credit score by consolidating your debts. You can take on one loan to pay off the rest of the debt, potentially enjoy a more competitive interest rate, and reduce the risk of missing payments.

Improving your credit score takes time, and you might not enjoy a healthy score immediately. However, by taking any of these actions above, you might be well on your way to better financial health, allowing you to take advantage of competitive financial products in the future.