4 Financial Habits That Improve Your Credit Score
If you want to take out a loan to buy a car, the lender is going to take a look at your credit score. It will tell the lender how much of risk it will be to loan you the money – the lower the score, the greater the risk that the lender will not get the money back.
So, it is to your advantage to improve your score as much as possible to get the best interest rate possible on your loan. How can you do that? Here are four ways.
- Pay your bills on time. Every time.
This is probably the single most important thing you can do to maintain a good credit score. Even if you only owe a small amount of money, take care to pay off the debt on time. Pay all utilities on time, memberships on time, loans (including credit cards) on time, your rent/mortgage. Any regular obligations you’ve taken on, pay them each month, on time.
To make sure you do make your payments when you should, try not to put too many expenses on your credit card. Stick to a budget so that you won’t have difficulty making the payments.
- Keep balances low.
Keep the amount you owe on your credit cards as low as you can because the amount you owe also affects your credit score. The more you owe, the lower the score.
- Keep the number of credit accounts low.
Opening up more accounts won’t do anything to improve your score, and if you have trouble keeping up with the payments, it will hurt your score. So, don’t apply for credit cards if you don’t really need to.
- Don’t move your debt around.
This would be something like transferring your balance from one credit card to another. Also, it is actually not a good strategy to close out the accounts of unused credit cards. You will owe the same amount of money, but you will have fewer credit card accounts, which may lower your credit score.
Improving your credit score is really about maintaining a good credit history. If you do something that negatively impacts your score, the amount of time it will take to build that score up again depends on what you did. For example, if you have a delinquent payment, it will take seven years before it is taken off your credit report.
We want you to have the best credit score possible, but even if it’s not as good as it has been in recent years, if you’re looking for a car in the Dallas area, check out the PAACO Automotive Group because we can finance your car loan here, with us. Visit one or our locations soon, or give us a call at 877-810-4555.