If you’ve had the rude awakening of discovering that your credit score is not high enough to get you approved for a loan that you want, don’t think that your poor rating is set in stone.
When you get the bad news of a low rating, it’s time to spring into action and begin to repair your reputation, as well as boost your score to where you want it to be. Higher scores mean more loan approvals, as well as lower interest rates on credit cards and other financial agreements.
Tips to Boost your Score
There is a lot of advice floating around on how to improve your credit score, but the essentials of making that change are not complicated. They basically involve using credit well and repairing any damage that you have done in the past.
Here are several suggestions to improve your credit score:
If you don’t have a credit card, get one, and use it wisely
To earn a good score, you have to demonstrate that you know how to use credit well. That means that you should have at least one card or two to make a case that you are controlled when it comes to credit.
Don’t believe any balderdash about carrying a balance to improve your rating. Pay them off at the end of the month, and your score will be even better.
If you are unable to qualify for a regular credit card, try for a secured one, where a bank gives you a line of credit equal to a deposit that you make. Even if you hate the idea of credit cards, having one or two can jack up your score in a hurry, especially if they are used well.
Take out an installment loan
Credit cards use what is called revolving credit; the other type of credit is installment, and if you can secure a personal loan, an auto loan or even a student loan, you can demonstrate good use of this second type of credit and boost your rating.
If you don’t need an auto or student loan, consider a small personal loan that you can pay back without much trouble. Shop around for the best rate and make sure that the loan will be reported to all three credit bureaus.
Pay down your credit cards
This tip seems obvious, but it is often hard to do. It is a great way to improve your credit rating in a brief amount of time. Lenders look for a large gap between your available credit and the amount that you are using. Widen that gap as best you can. Shoot for a balance that is under 30% of your limit — 10% is even better. It’s probably best to eliminate the lowest balance first and go from there, rather than attacking the card that has the highest interest rate.
Use these three quick tips to improve your credit score and get to where you want to be financially. A good rating opens many more possibilities for you and your family.