Any time you try to borrow money, whether it’s to buy a home or consolidate debt, your lender checks your credit score. If you have a solid credit history, you can get better interest rates and terms. If you do not, however, you may not even qualify for the loan. Here are some ways to improve your credit score and increase your chances of getting the funding you need the next time you need it.
Pay Bills on Time
Potential lenders look at your FICO score to help them determine the risk they would take to lend you money. The easiest way to improve your score is by consistently paying your bills in a timely manner. Some creditors report to the agencies who monitor your score regularly, but you can also request that your monthly payments such as rent and utilities be taken into consideration. Good payment habits indicate that you will continue this practice with new loans or lines of credit that you receive.
Lower Your Debt
If you owe a lot of money, new lenders may be hesitant to add to that debt. By paying off your debt as quickly as possible, you demonstrate that you do not take on more debt than you can handle. It also lowers your credit utilization ratio, which can raise your credit score.
Take Out a Loan
Sometimes, the problem with your credit score isn’t poor decisions but rather limited information. Before mortgage lenders offer you such a large loan, they want to see how you have handled smaller amounts. By taking out low interest loans Bordentown NJ, and paying them back responsibly, you can establish a strong credit history.
Improving your credit score may not seem like a priority right now if you have everything you want. When you are ready to upgrade to your next new home or vehicle, however, you will be glad you made the effort to increase your score.