Tips to Improve Credit Score
April 29, 2019
Shopping for your next car? Need financing? Have less-than-perfect credit? If you answered yes to all three, this is the article for you. Improve your credit score before you seek out financing, and you may be eligible for lower interest rates. We want to share some tips to improve your credit score.
These tips can help shoppers across Macon, Warner Robins, and Milledgeville raise their credit scores before applying for financing. Learn what you can do to boost your credit in as little as one month from the experts at Macon Car Credit!
Catch Up (and Keep Up) on Payments
We’ll start with the obvious: If you’re behind on payments, getting current will help your credit score. Get a handle on your payments and make sure you pay in full by the due dates. This goes for credit cards, bills, mortgage payments, and anything else that may be reported to the three credit bureaus.
Reduce Your Credit Utilization Ratio
Many don’t realize this, but the amount of credit you use relative to your credit limit (i.e., utilization ratio) affects your credit score. A good rule of thumb is to keep that ratio below 30 percent, but the lower you can go, the better. Under 10 percent is ideal.
So, if the limit on your credit card is $1,500, keeping utilization under $150 optimizes your position. You can see a credit score improvement in as little as one month by reducing your utilization ratio.
Plans for New Credit Lines? Ditch Them
At least for the time being. Try to avoid applying for new lines of credit for at least six months before you apply for financing. That includes credit cards, student loans, and the rest of it.
When you apply for credit, the inquiry is reported to the credit bureaus. Too many inquiries, especially in a short period of time, can lower your score. Inquiries stay on your credit report for up to two years, but the negative effects usually fade after 12 months.
Opening new credit cards can also reduce the average age of your open accounts. This can also cause your credit score to fall temporarily. (A corollary: Don’t close out longstanding credit cards, either. Even if you don’t use them often, keeping them open will extend that average age.)
New to Credit? Try a Secured Credit Card
Yes, we know… this flies in the face of what we just said! If you’re building credit for the first time (or rebuilding from the ground up), consider opening a credit line. Show that you know how to handle credit responsibly, and your credit score will reflect that.
In cases like these where you have limited or no credit (or very poor credit), a secured credit card is often the best option. You’ll need to place a refundable security deposit, the amount of which becomes your credit limit.
After you’ve shown that you can pay responsibly over time (usually a year), your deposit will be returned. In that time, you can see your credit score go up and up!
Start Improving Your Credit Score Today
The journey to good, even great, credit begins today. Follow these tips to improve your credit score, and you’ll be well-positioned to apply for financing soon!
Want more credit-building tips? Just reach out to Macon Car Credit. We’re happy to help Macon, Milledgeville, and Warner Robins drivers become true credit connoisseurs!