Tuesday, August 16, 2022

How to Improve Your Credit Score For Better Financing

Every year, millions of people around the world strive to improve their credit scores. But what’s the secret? Once you improve your credit score, this will open the door to  financing whether a car loan, mortgage,How to Improve Your Credit Score For Better Financing credit card, or another source. So, how do you get there? 

Reduce Credit Utilization By Better

Firstly, it’s not necessarily enough just to pay your credit card bills on time and in full. Why? Because your credit score also considers your credit utilization. In other words,How to Improve Your Credit Score For Better Financing the percentage of your credit limit that you use. If you’re constantly maxing out your credit cards, this doesn’t look as good on your credit report as those only using 10%. For a positive score,How to Improve Your Credit Score For Better Financing it’s best to keep credit utilization under 30%. 

Pay Bills Effectively For Better

It might sound obvious, but one of the best things that you can do for your credit score is to pay all bills on time and in full. As soon as you start missing payments or paying late, this sits on your credit report and affects it dramatically. In some circumstances, late payments can remain for over seven years

If you think that you’re going to miss a payment, contact the creditor as soon as possible to arrange a payment schedule. Often, people bury their heads in the sand rather than just communicating with creditors. Sometimes, creditors appreciate the warning and accommodate requests. Suddenly, you have more time to pay the bill and your late payment doesn’t impact your credit score

Check Your Report

While people might see the credit reporting agencies as magical bodies that know everything, they’re known to make mistakes with scores and reports. With this in mind, it’s critical to check your report for errors. It’s hard to think that a simple mistake could be preventing you from your dream home

Don’t worry, everybody is entitled to access their report every so often. If you see a late payment that isn’t correct, contact the reporting agency and get it removed from your record. 

Limit Credit Inquiries

Did you know that there are two types of credit card checks? Commonly known as ‘hard’ and ‘soft’ checks, the former will impact your credit score while the latter will not. If you’re constantly applying for loans and giving companies permission to perform a hard check, this will drain your score rather quickly. 

While some hard checks only stay on your report for a few months, others can stick around for years. The more hard inquiries you have, the more this affects your score. Therefore, keep tabs on applications for auto loans, credit cards, mortgages, and other forms of credit. 

Get a Credit Card 

While this might sound counter-intuitive, it could be a lack of a credit history affecting your score. In some cases, non-existent credit history is just as bad as poor credit history. If you want to boost your score, get a credit card, and show lenders that you’re responsible. Keep your credit utilization below 30%, pay bills on time, and your score should steadily improve. 

While on this topic, keep old accounts open because this is another resource that credit reporting agencies use to check your reliability and build your score. When you close a credit card with no balance, it reduces your available credit and boosts your credit utilization ratio from other cards. For example, you may use $2,000 from an available $3,000 rather than an available $6,000 (two cards of $3,000). Suddenly, your ratio is up from 33% to 66%. 

Elsewhere, don’t be afraid to contact an auto financing expert in Moncton for tailored help if your eyes are on a new vehicle!

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