Financial experts urge consumers to check their credit reports and credit score at least once a year. This is the best way to stay on top of their credit. But sadly, many ignore this advice. In fact, some people don’t realize their bad credit status until they have trouble qualifying for a loan. Although having a low credit score doesn’t necessarily stop loan approvals, it limits your financing opportunities and results in higher interest rates.
Is your credit score less than stellar? Fortunately, there are several ways to add points to your score and acquire better loan terms:
1. Apply for an auto loan. Surprisingly, you don’t need good credit to qualify for some auto loans. Because the vehicle acts as collateral, some lenders are willing to work with people who need to build their credit or improve their credit score. For example, if you’ve always wanted a Cadillac, you might visit www.williamsoncadillac.com and apply for an auto loan with the dealership. If you make your payment on time each month, this adds positive history to your credit report, which helps your credit score.
2. Ask your landlord to report your rental history. Typically, landlords don’t report rent payments to the credit bureaus, unless you default on the lease. But if you’re trying to improve your credit score, a positive payment record helps. Approach your landlord and ask him to report your rental history to the bureaus each month.
3. Get a secured credit card. Major credit card companies have strict requirements, and a low credit score can stop an approval. However, banks that offer secured credit cards aren’t too concerned about your credit score or credit history. These types of credit cards require a security deposit and feature a low limit, but anyone can qualify. And since these banks report to the bureaus, timely payments can raise your credit rating.
Pay down a credit card balance. Paying your credit card bill on time each month helps your score, but if you max out your credit cards or keep high balances, this can harm your rating. Give your credit score a jump by paying off (or paying down) your balances. As a rule, keep balances below 30% of your credit limit. Cut up your credit cards to prevent use, and then increase your monthly payments.
5. Get help from your parents. If your parents have good credit, adding your name to one of their credit cards can quickly raise your credit rating. This makes you an authorized user on the account. As a result, any activity associated with this credit card appears on your credit report. Your credit rating will benefit as long as the account remains in good standing.
Tackling bad credit requires a proactive attitude and determination. It takes more than a few days or weeks to fix your credit. Consistency is the key, as well as keeping long-term financing goals in mind. Keep an eye on your due dates, practice self-control and monitor your credit record.