Your chances of securing a loan relies heavily on the kind of credit score you have. The better the score, the higher your chances of getting that loan will be. A good credit score can also get you a relatively painless set of terms for your loan. So when you plan on getting a loan, make sure your credit score looks good first.
Here are a few tips to get your credit score up to muster.
1. Credit Score Review. To determine how things stand with your credit score, make a review of it. See where your problem areas are and correct them. Also, make sure of the accuracy of the report. If there are any errors, inform the appropriate people immediately.
2. Pay On Time. How soon you pay your bills weighs greatly on your credit score. It actually accounts for 35% of your credit score. You should do as much as you can to avoid paying late. Make automatic reminders for you to pay your bills. You can also use the services of automatic payment systems to make the payments for you. Of course, make sure you have the balance to cover it.
3. Keep Balances Low. 30% of your credit score depends on the ratio of the amount that you owe and the available credit that you have. This means the larger your credit balance is, the lower the ratio that you will get. Thus, if you keep your balance as low as you can every month, you can be assured of a high credit score.
4. Keep Up Card Activity. Aside from keeping your balances low, you can also get a lower ratio between your credit balance and your available credit by getting multiple lines of credit. With multiple credit lines, you have a higher credit amount available, which will actually give you some leeway with your credit balance. Don't get tempted, however.
Of course, to continue enjoying your higher credit amount, you must keep your multiple cards active. To do this without bloating your balance, use your cards for small purchases every once in a while.
5. Avoid New Cards. While having a number of credit cards can help your credit score, getting too many can actually hurt it. Avoid opening too many cards, as they will hurt your credit score in the short term. The burden of juggling bills and purchases over many lines of credit might make it difficult for you to keep up. Also, opening multiple lines of credit in a short time can ring warning bells amongst most creditors.