Look, as much as I largely preach the gospel of doing as the big financial institutions do and not so much as they say, there are definitely some instances I can confirm to feature these institutions offering up some sage advice when it comes to handling your finances. You see, what you really have to do is look at it from their point of view – financial institutions such as banks are only in the market they service for one thing and one thing only, which is to make some healthy profits for themselves.
This pursuit of profits doesn’t however mean that it’s at the expense of absolutely everything else – not all the time, at least. Although financial institutions are out to make as much money out of as many people as possible, there are times when their interests are perfectly aligned with the consumer.
So on the flip-side of trying to get you as the customer to save as much of your money with them as possible so that they can use it to make more money and keep the bulk of the profits is motivation for the likes of your bank to help you get out of debt and in so doing improve your credit score. So when a bank publishes a guideline detailing how to improve your credit score, you best believe it contains some really good advice.
Unfortunately you’d be looking in the wrong place if you’re seeking a set of guidelines such as one around how to improve your credit score from a bank because banks often sell off what they deem to be bad debt and focus on those clients from whom they can continue squeezing some profits out of.
Fortunately as part of a team of people who were right at the heart of the consumer financial sector, I’ve long since come across the quintessential debt-escape plan which was put together with the main aim of helping clients come up with an operational method that will improve their credit score at the same time.
Be honest about your situation
The first person with whom you have to be honest about the situation you find yourself in is nobody but you! Admit to yourself that there is an issue to deal with, whether it’s a big pile of debt you can’t see yourself paying off anytime soon, or if it’s a bad credit score you have to deal with which is preventing you from progressing economically as a result of not being able to get credit. Often debt and a bad credit score are synonymous, concurrently compounding what is already quite a problem to have to deal with in isolation.
So stop running from the creditors and stop making promises you know you won’t be able to keep. If you know that you won’t “have the money by next week” then don’t even bother trying to use that as an excuse. Rather present the facts as bare as they are to your creditors.
This applies to those who have a bad credit score as well and who are turned away by lenders because of this. Be forthcoming and completely transparent about the situation you find yourself in, because doing so can get you the help you need.
Get help
Creditors are running a business and their business is to make money out of lending people like you money. So to build on the advice shared about why you need to be honest about the situation you find yourself in, if you present the situation as it is to a creditor they might devise a clever way for you to improve your credit score and/or get out of debt, even if their motives come from the selfish place of trying to turn you into a qualified customer of theirs.
Use existing credit facilities wisely
The issue of a credit rating is a very delicate one which can be very complicated because in order to better your credit rating you have to demonstrate the improved ability to handle debt, and in order to be able to exercise that ability to handle credit extended to you, you need some credit to work with. The best way to go as a result is by making clever use of the existing credit facilities you still have access to, like borrowing some cash against your credit card a day or two before payday and then paying it back before any interest charges can kick-in.
Any payment towards eradicating your debt counts positively towards bettering your credit rating, even if it’s a little exhibitory as in the case of the credit taken out and paid back a very short time later on your credit card.
