How to Improve Your Credit Score
Buying a car, or even getting an auto loan, depends heavily on your credit score. With any major purchase, be it a car or home, lenders and sellers alike tend to check your credit first to make sure you are a trustworthy borrower or buyer. They want to know that you’re able to responsibly pay for your investment in a timely manner before they let you walk away with the keys. Whether you have no credit or bad credit, here are some ways to optimize your credit score so it looks its best before you apply for a car loan or purchase a car.
Check Your Credit Score
First, make sure you check your current credit score. This will give you a good starting point to determine the ideal place you want your score to eventually be at. A lot of banks, credit unions, and credit card providers are starting to offer this service for free for its customers. When you receive your credit score, you may also find there are some listed factors that let you know what is affecting your current score, such as late payments. Even if your score doesn’t look good now, you can still improve it in time. Note that your credit score does not improve overnight; by managing it responsibly over time, you can drastically improve your score withina few months.
Make Payments on Time
Your credit score is more likely to improve if you consistently pay bills on time, or even before they’re due. Instead of waiting on paying for a bill within the week that it’s due, try allocating funds throughout the month so you are able to pay for it at the beginning of the month. Even better, try saving money in-between months so that you are able to pay all of your bills off at once at the start of the month. This is just one of many organized ways to keep up with your bills, and it won’t result in you scrambling for the checkbook after realizing you have something due the next day.
Pay Off Outstanding Accounts
Finally, paying off any current outstanding fees you owe to a lender will make a big impact on your credit. If you have credit cards, try to avoid using them until you pay them off entirely; it’s harder to play catch-up if you’re constantly using them. Also mind how much you put on your credit card after it’s paid off. Spending up to half of its limit will make a big difference on improving your credit score compared to if you max it out—which can actually hurt your credit score.