A strong credit score can mean the difference between getting a home or auto loan at a great rate and not getting a loan at all. Most often, a poor credit score means that loan options are still available, but at much higher rates of interest. The cost of higher interest over the life of a loan can add up to hundreds or thousands of dollars that would be saved by waiting until credit scores improve to apply for credit.
Request Free Copies of your Credit Reports
Log on to a site such as annualcreditreport.com and request credit reports from all three reporting agencies (see link in Resources). Check each report for accuracies and errors. Make corrections as needed.
Pay Down Debt
Your credit score is an objective number based on several factors, including your debt-to-credit limit ratio. Maintain your credit card balances at 30 percent (or less) than your credit card limits.
Pay Bills On Time
Paying bills late has a negative impact on your credit score. If you have paid late previously, paying by the due date from this point forward will improve your credit score with time.
Manage Different Types of Credit Well
Credit scores are improved with a mix of credit accounts. Managing a combination of credit types, such as revolving (credit cards) and installment (auto or mortgage), improves credit scores.
Get Back in the Saddle
Past credit problems, such as bankruptcy, can make for reluctant borrowers. To rebuild credit scores, you must manage credit. Start with a secured credit card.
Avoid Quick Credit Fix Promises
Don't fall for promises to fix credit scores. If the information on your report is inaccurate, you can have it removed yourself for free. If it is accurate, it will not be removed for 7 to 10 years from the date of last activity.
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