How Engineers can Increase Their Credit Score?
Engineers are usually very intelligent people. They have a high IQ which includes the ability to think outside of the box and invent things that no one else has thought about. This can be seen in their inventions, creations, innovations, and ideas they come up with each day. Engineers are also known for having a low credit score because they don’t spend money wisely or take care of their finances well.
With all these responsibilities engineers need good credit so they can buy materials needed for projects without fear of being denied by banks or other lenders. Or even if they want to buy a house, a car, or even start a business they won’t have to worry about the loans being denied. If you are an engineer and want to improve your credit score, here are some tips on how you can do so.
What is a credit score?
A credit score defines someone’s creditworthiness. It is an important component when applying for a loan or credit. The banks use this score to determine whether you are worthy of the loan they are about to offer. This can be in the form of a mortgage, car loan, or business loan. The higher the credit score the better chances you have of being offered a loan and better the credit you may receive
Benefits of having a good credit score
- You won’t get your loan application denied
- You can better premium rates than people with low credit scores
- You can save money on insurance/debt premiums
- You can access financing quickly for your ideas/projects
8 ways engineers improve their credit scores?
As we mentioned, your credit score reflects your ability to repay a loan on time and responsibly. A higher credit score means your chances of getting a loan or finance, at better premium rates and conditions, will be improved. If you want to improve your credit score quickly, here are a few tips you can follow:
- Pay off credit cards first before anything else
Credit cards come with high-interest rates. That means you are charged for the money borrowed more than its base rate. If you don’t pay off your credit card bills first, you will end up paying a lot of money for a small amount borrowed in the end. In order to avoid that, you should pay off your credit card bills first before anything else. Try not to use your credit cards unless really needed. So you can save the money for what is more important at this point.
- Use less cash and more credit cards
It might seem like a wrong strategy at first, but using your credit card is a good way to improve your credit score faster. Because every time you pay your credit card bills on time, it gives off a record of how responsible and trustworthy you are when it comes to finances. But please beware of spending too much though and constantly maxing out your credit cards. If you can’t afford to pay it in full make sure you at least pay the minimum payment every month to avoid late fees and finance charges.
- Have a good income source
Having a stable income can improve your credit score. If you can’t provide proof of a stable income source, it will be very hard to get a loan from the bank. If you can’t get a loan from the bank, this will lower your credit score again. Having a steady source of income is not only good for getting a better credit score, but also for other things in life that require money.
- Don’t get multiple loans at the same time
You might be tempted to get a loan from different lending companies at the same time. This will not only lower your credit score but also increase the chances of getting denied by the lender. Even though you have good income sources, it is still bad to apply for loans from multiple lenders at one given time. Because it may make you look irresponsible and desperate in the eyes of creditors and lenders.
- Create multiple income sources
You should try to create multiple income sources. This can be done in several ways. The easiest way is to get a part-time job aside from your full-time job for extra money. Other than that you could also start blogging or do freelance projects on the side of your current job if permitted by your employer. Although this will not be an immediate source of income, it will be something to fall back on in the future.
- Create your credit history
If you already have a credit card, use it in moderation. Don’t max out your card and try to pay off the full bill each month when you get the statement in the mail. This will create a good credit history for yourself that can be used when applying for loans or other financial opportunities that might come along your way.
- Keep track of your expense and spend less
This should go hand in hand with the other advice we provided above. You must keep track of your expenses from each paycheck and try to spend less than what you make monthly. You can do this by setting a budget for yourself and sticking it down, or trying to find ways to cut back on unnecessary expenses. It’ll make you look like a responsible customer in the eyes of creditors and lenders.
- Talk to a financial advisor and plan your finances
If you are really worried about your credit score and don’t know where to start, you should talk to a financial advisor. They will be able to tell if your current income is enough for the number of loans you want to apply for. They can also help you improve your credit score if need be without giving in too much trouble or having to pay too much extra money.
A few things to avoid
The above-mentioned points are some of the basic things you need to do in order to improve your credit score. But there are also a few things that you should avoid in order not to make your situation even worse.
- Don’t miss your credit card and other debt payments
- Don’t spend more than you earn
- Don’t ignore the problem for too long
- Don’t apply for loans with poor credit
- Try not to get multiple credit cards at once
- Don’t be afraid to ask for professional help such as a financial advisor
Final thoughts:
Engineers are known for their smart work and innovative ideas. However, sometimes they can lose track of their finances and end up with a low credit score due to their busy schedules. But with a little discipline and following the above-mentioned tips, you can easily boost your credit score and start reaping the rewards that come with it.
