How to Improve your Credit Score/Oct 31, 2018
Tips for improving your credit score
Unless you want to spend a large sum of money in interest when you buy a vehicle, you’ll want to ensure your credit score is the best it can possibly be prior to purchasing. If you’re struggling with reaching your desired credit score, read ahead for some helpful tips:
Follow the 30% rule
Just because you have credit available to you doesn’t mean you should be using it all. In fact, many experts suggest that you should never use more than 30% of your available credit.
For example, if you own two credit cards, both with a limit of $5,000, you should only be using $3,000 at most at any given time.
If you currently spend more than 30% of your available credit, it may be a good idea to have your limit increased. You’ll have a much easier time reaching your target goal.
Don’t close an old account
The longer you’ve had an account open for, the higher your credit score will be if you’ve shown a strong ability to pay off your debt. If you transfer your old account to a different product, it will be treated as an entirely new account, which may decrease your credit score.
If you have an old credit card with an annual fee of $0, you should continue to keep it open and use it only periodically to boost your score.
Only apply for credit if you need to
Every time you apply for credit, someone will need to check your credit history to determine whether to accept your application. This entire process is generally referred to as a “hit” and will go against your credit score if you have many hits.
Credit card applications, rental applications and even some employment applications will trigger a hit. Therefore, if you’re looking to buy a car in the near future, make sure to limit these applications prior to purchasing.
Dispute any errors in your credit report
Once you’ve obtained a copy of your credit report, check it thoroughly to see if there are any errors. Remember that it’s your responsibility to point out any mistakes. Otherwise, you could be dinged harder than you think.
For instance, your score could take a big hit if your report states that you made a late payment that you actually made on time.
Pay off any outstanding balances
Of course, if you have any outstanding balances, it’s important that you pay these off in the months prior to applying for a car loan. Not only will you have a higher credit score, but you will also have an easier time paying off your monthly car payments by reducing the amount of outstanding debt.