If you want to have access to quality products on the lending market and not be restricted financially in general, you need to have a good credit score. It’s one of the fundamental concepts of living in our modern society, for better or worse. And while some people are quite careless about their own scores, you should not treat them as a guide for your own behaviour. You should always be striving to have a good credit score to the best of your financial abilities.

Unfortunately, sometimes your financial situation might make this a challenge. It can be hard to think about improving your credit score when you are barely making ends meet and are turning to loans in the first place. But you have to put your mind to it and force yourself through that difficult situation, because otherwise your problems are only going to get worse in the future. Building a proper credit score when you’re on a limited budget is difficult, but certainly not impossible. You just need to set your priorities straight.

Limit All Possible Expenses

First of all, consider where you’re spending your money and think about any expenses that can potentially be reduced or even cut out completely. Even if you think that you’re already living on the edge, you’re probably not entirely right about that. Make a list of all your expenses and go through it carefully – you will probably notice at least one or two opportunities for optimization in there.

Remember, many of those budget cuts are something you’ll only have to live with temporarily. Once you’ve improved your credit score and have climbed out of your bad financial situation, you’ll be able to resume your regular lifestyle and enjoy all your previous habits.

Plot Your Budget

On the note of making lists, you should have a clear overview of your budget. An income/expenses balance sheet is a good start, but you can take it one step further with the help of modern technology. Look into plotting your budget in Excel or a similar tool. With just a few clicks, you can present your financial information in a way that’s much easier to parse at a glance. This can be important when you want to make sure that you’re optimizing every cent of that money, and that you’re moving in the right direction. Watching the plot evolve over time can be a motivating factor in itself.

Use Your Credit Cards

Credit cards can contribute a lot to a good credit score when used right. As long as you always make sure to pay off your balance on time and don’t delay anything, you can expect to see some nice contributions to your score over time. So if you have a credit card – or more than one – available, you should use it as much as possible during this time in order to maximize the benefits for your credit score.

The only thing that’s important to keep in mind here is that you should be very responsible about making those payments on time. Otherwise, you’re going to see the exact opposite effect, and your credit score is going to go down over time. It can be even more difficult to climb out of that hole once you’ve dug yourself deeper in, so be careful. It doesn’t even take that much to find yourself in a situation like this, as these problems can stack up fast.

Prioritize Repaying All Pending Loans

If you have any lines of credit open at the moment, you should make it a priority to take care of them as quickly as possible. This will not only help improve your financial stability in the immediate sense, but it will also contribute positively to your credit score. The longer you keep those lines of credit open, the worse they’re going to affect you in the future. So make sure that you’re making those payments on a regular basis, and that you aren’t forgetting any important loan if your list is long enough.

Also, once a loan is paid off in full, talk to the creditor to ensure that it’s properly marked as resolved. It can occasionally happen that a lender might forget to communicate the situation to the right institutions, which can put you in a bad place if you decide to pull up your credit report for a new loan one day.

Keep Your Score High After Improving It

Once you have your desired credit score, you might think that you’re done. Far from it though – the story is just beginning. You now have to make sure that you maintain all those positive habits you’ve developed while improving your score, and keep working on it as much as you can in the future. You should never relax about this – you don’t know what might happen tomorrow that may require you to take out a large loan. And the better your credit score is when something like this happens, the more options you’ll have at your disposal in general.

Improving your credit score doesn’t require you to have a lot of money at your disposal. It’s just a matter of building the right habits and sticking to them in the long run. It also requires a good deal of education about the way the financial system and the lending market work. Taking your time to learn those things can make a huge difference in the kinds of situations you find yourself in the future with regards to your finances.


Planning to take out a loan? That’s not a bad idea if you are well informed and know what to expect from the whole ordeal. However, it’s not a decision you should rush into without checking all factors on the market first. There are many things that affect how good your loan will be for you in the long run. Sometimes it’s worth waiting a little before getting it, if that means getting better conditions.

The interest rate on your loan is the most important factor you’ll want to consider. There are various ways to get a better interest rate, depending on the kind of loan you’re interested in. But in most cases, being prepared with a solid financial track record is one of the best things you can do to maximize your chances. And with the help of the Internet, you can be sure that you’re not missing out on any good deals.

Use the Internet Properly

Which brings us to our first point – make sure to do your research online as much as you can. There is a lot of information out there, much of which will come in handy when you’re trying to get a good interest rate on your loan. Learn about how interest rates are calculated in the first place, what factors can affect the offers you get from your lenders, and what you can do on your end to improve your chances.

You should also take the opportunity to educate yourself about personal finances in general. If you don’t have good habits for managing your finances, a loan can be a very problematic factor in your life. The reason you often hear about people getting into financial distress is because they’re usually poorly educated on how to handle their personal financial affairs in an efficient manner.

Consider Every Factor

As we said above, there are many things that can affect the interest rate on a loan you’re taking out. Some of them are out of your control, but others aren’t. If you can work on your credit score before applying for the loan for example, this can improve your chances of getting a good interest rate. Likewise, make sure that you’re responsible with the repayment of all pending debts you currently have to your name. Even a small delay can sometimes incur major penalties when you’re trying to get a good rate.

Don’t Jump at a Long Term Straight Away

Increasing the term of a loan is a good way to reduce your interest rate on it. However, it’s not an option you should take lightly, as it comes with its own repercussions. The farther you go into the future, the more difficult it becomes to predict how your financial situation is going to play out. You can’t completely rely on the information you have now to make decisions that far ahead, so don’t get yourself into debt that might put a strain on your finances later on.

In general, you should prefer to take out your loan for a shorter duration and deal with the higher interest rate than the other way around. Even if it means having to pay more on a monthly basis than you initially assumed you would, the fact that you’ll be free of your debt as soon as possible is what really matters.

Talk to Your Bank

Don’t just assume that the rates your bank has listed at their website are the final ones you’ll have to pay. If you’re in a good financial situation – e.g. you have an acceptable credit score and no major issues on your record – you might have some room for negotiations. Talk to your bank and see if they might be open to changing their interest rates in your case. It won’t always lead to any results, but it’s still worth a try and it doesn’t cost you anything in the first place.

Improve Your Credit Score

We already touched on this above, but it’s important to reiterate. Working on your credit score is something that should be a natural habit to you if you want to operate in the modern financial market properly. It’s not something you can just randomly decide to do for a brief period of time and then drop it. You have to develop the right set of habits and stick to them, otherwise you’re not going to get the best interest rates that might be available to you in your current situation.

You can also use your new loan as an opportunity for boosting your credit score a bit too. After all, any line of credit contributes to that, and if you can make those payments on time, it will benefit you in the long run quite well.