In the world today, having good credit is essential and can save you money over time when you need to borrow and take out loans. If your credit is not the best, and you are looking to improve your score, there are ways in which you can do so. The following are some recommendations to help you boost your credit score and improve your chances of qualifying for better loan rates in the future.
Apply For An Auto Loan
When you are working on improving your credit score, the more of a credit mix you have on your credit report, the better your score can be. For example, you don't want to only have revolving credit accounts on your credit, but you want a good variety of revolving credit accounts combined with installment accounts. If you have the opportunity and need to buy a vehicle, having an auto loan on your credit will help boost your credit score and give you the needed installment loan on your credit.
As you shop for an auto loan, keep in mind how often you apply for credit and the timing of each application you complete. For example, if you shop for an auto loan rate with your bank and several other auto loan service companies, make sure you complete them all within 30 days, as they will be counted together as one inquiry instead of several. Since each of the companies you talk to will make a hard credit inquiry on your file, bundling them together will reduce the amount of credit score points you may lose.
Then, you can review each of the loan terms and choose the best one for your auto purchase. Also, keep in mind that the length of your auto loan will improve your chances to boost your credit score because the longer you pay on your auto installment loan, the more history your on-time payments will be posted to your file.
Manage Your Credit Card Accounts
As part of keeping a good mix of credit accounts, having revolving credit is recommended and also essential in today's world. You will use a revolving account to make purchases online, rent a car, reserve a hotel room, or make any number of purchases that you would like to have purchase protection backed by the credit card company, as examples. However, be sure you use your credit accounts wisely to help you improve your credit, and make your monthly payments on time.
As you manage your revolving accounts, look at the types of cards you have and choose to only keep the ones that don't cost you extra. Some credit cards may have an annual fee or membership fee that you have to pay each month. Some credit accounts might have a higher fixed rate than your other credit accounts. Look at these factors and close out the ones that you are no longer using that would cost you the highest in fees in interest.
This will result in your keeping open several accounts that you are actively using or paying on, and others that you keep to use potentially in the future. Overall, this will help you work on reducing your credit utilization, which is based on the percentage of your total credit line that you have used, and improving your credit score without spending too much for your revolving credit accounts.
To learn more about auto loans and other forms of credit, consult a resource in your area.