Repairing your credit score before seeking a loan can help ensure a quick approval. Credit scores measure how well you manage credit, and lenders use this information to determine approvals. Financing anything from cars to houses necessitate a decent credit history.
Pull Your Credit Profile
Knowing what you need to work on or improve helps speed the credit repair process. The best way to learn your credit history is to pull or request a copy of your credit report from annualcreditreport.com. These free reports detail your credit history. They show what creditors are reporting about you, and if you have delinquent accounts or collection accounts, these will also appear on your report. Regrettably, errors can also appear on your report, and any negative information reported in error can reduce your FICO credit rating. Check your report regularly to detect mistakes.
Clean Up Payment History
Payments make up 35 percent of your credit score, and repairing your personal score calls for organization and paying bills before they are due. Creditors and lenders often offer provisions when debtors experience payment problems. Communicating with your lender and asking for assistance helps you avoid delinquencies. Start anew and resolve to make all your payments on time each month. If necessary, start paying bills several days or weeks before they are actually due.
Credit Scores and Debt
Debt doesn't only impact your amount of available funds. Balances on credit cards and loans can decrease your credit score---especially if you max out credit cards or use more than 30 percent of the credit limit. Stop charging merchandise and pay for things with cash to help reverse debt. Getting rid of debt isn't easy for some. But with determination and a plan, you can pay off balances and enjoy a higher credit rating. Get out of the habit of only paying the minimum. Sell belongings, take money from savings and make higher payments to get rid of balances.
Other Tips
Certain actions can further reduce your credit score and hinder any efforts to repair the damage of a low credit score. While fixing your credit score, refrain from applying for new credit accounts. Credit applications result in credit checks, and each inquiry takes points off your score. Additionally, closing a credit card can also hurt your score because it may decrease the length of your credit history.
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