Preparing for a major loan? Are you ready? You might think that you are but there are some things that you can probably do to get yourself a much better loan rate.

When preparing for a major loan like a mortgage or even a car loan, you need to make sure that your credit score is  as high as you can possibly get it. To accomplish this, you need to work on your credit 2 to 3 months before you apply for a new line of credit. Here are a few things that you can do to add 10, 20 or even 30 easy points to your credit score.

7 Ways To Quickly Improve Your Credit

1) Correct Credit Report Errors

This is the very first thing that you need to do. Pull a credit report and look for any errors. You can pull a credit card free through the bureaus directly once a year. You can also use websites like Credit Karma to pull a free report. Look for accounts that are not yours, addresses that are not correct and even dispute inquiries if you are not sure that they belong to you.

It will take about 2-3 months to get errors removed from your reports so this is the very first thing that you should do. Removing just one incorrect account could raise your score 20 points and incorrect inquiries lower your score by several points a piece.

2) Pay Down Balances

Next, you need to pay down your credit card balances. Lenders like to see low balances and high amounts of available credit. Pay particular attention to the store cards which can be a detriment to your credit score.

One tip to get your balances below 30% is to get a credit line increase instead of putting money down. Call your creditors and ask for a credit line increase. If you have $600 on a $1000 credit card, that is a 60% balance. Get your creditor to bump your limit to $2000 and you are all of a sudden at 30%.  Most creditors will not pull your credit for an increase request. If anything, they will do a soft pull which will not effect your score. If in doubt, ask them if an increase request will result in an inquiry.

3) Avoid Additional Inquiries

It should go without saying that you should avoid additional inquiries. Each one can potentially affect your credit score. Lenders do not want to think that you might be opening up credit accounts everywhere. For all they know, that inquiry might have led to a new account and the new accounts might not be on your report yet. It makes them think that you r report might not be as accurate as possible.

4) Pay Your Bills On Time

This is one of the biggest factors that will influence your credit score. There is almost nothing that will tank your score as quickly as a 30 day or 60 day late strike on your report. If you happen to have a missed payment, you might be able to convince your creditor to remove it from your report as long as you are current. This is not an easy task to accomplish but it is worth a try.

5) Get A Credit Card

In rare cases, it might actually benefit you to apply for and get a credit card. This might be the case if you do not have and have never had a credit card. Adding one will give you an increase to your available credit and will diversify the types of credit that you have experience with. Don’t go crazy, just apply with one good company and do your research for one with no annual fee.

6) Keep Unused Cards

You can also improve your score by not doing some things. Do not close those unused credit cards. Doing so can lead to a decrease in your available credit and can actually lower your score.

7) Be Patient

Some things will unfortunately take time, maybe even more than three months. Things like late payments can take time to come off of your report. Their effect will diminish over time so if you have some recent late payments, your best option might be to wait. Waiting six months for that late payment to age while establishing a good recent payment history could save you a lot of money on loan interest.

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