Suppose that you need to make a purchase that you cannot make with the amount of cash that you have on hand. And, you cannot wait for the purchase until you build up enough cash reserves. A good example of this would be a vehicle purchase. If yours is falling apart and you need something more reliable and you do not have the cash to pay for another vehicle, you are going to have to finance that purchase.
You check your credit score and discover that you are going to be paying more in interest that you wanted to which means that they payment amount and length of loan is more than you can handle. What can you do to increase your credit score in order to help you get a better rate on your loan? Here are some tips that you can use to move your score up as much as possible in as little time as possible.
Credit History Longevity. The length of time that you have had a credit history is important. If you have a short history, you are seen as a higher risk and so will not get the best rates. Keep your credit history flowing with good, positive activities on a consistent basis.
Pay on time. Be sure to pay your loans on time with no late payments. These put a mark on your credit that is difficult to remove. But even more than that, missing just one payment can lower your score by around 100 points. Ouch.
Review credit card accounts. If you have to close an account to put you in better standing, then close one that has been opened for the shortest amount of time. Otherwise, rotate the use of your credit cards to one per month.
Pay it off now? If there are any loans or credit cards that you can pay off, go ahead and do that, but avoid paying all of them off. That would be a red flag (believe it or not) on your credit history. You need to maintain some positive activity as mentioned before. By paying off some loans now, you will be able to afford any new payments and that is always a good thing.
Credit Counselor. If you have a low score you might consider hiring a credit counselor to help you with a ‘rapid re-score.’ What this does is to find errors on your credit report that can be fixed within about 3 days. If it costs you around $100.00 for this service, it would be worth it considering what you will keep from paying in higher interest charges over the life of a loan.
These are some things you can do to jump-start your credit score and get it headed in the right direction.
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