When the time comes to apply for finance for your dream vehicle, you need to ensure your credit score is in your favour. Now, if you’ve ever experienced a declined loan application due to poor spending habits and financial decisions, you will know that it is not a moment of celebration in your life.
While it might feel like you’re a failure, never give up. There are plenty of ways to go about credit score improvement, but you need to be patient and willing to put your dream vehicle off for a while before you build up the courage (and the finances) to give it another try. When you become more responsible for your financial decisions and make a positive change, your credit rating will reflect that for future opportunities.
Here are a few tips for improving your credit score:
Analyse and review your credit report
Mistakes happen every day. Your credit report could have been pulled from the wrong person or rated according to accounts that do not belong to you. For instance, look at the address, and personal and account information to ensure everything that is stated on the credit report is correct and yours. If there is an error, make sure to consult with a creditor to update your report. If you find that you have been a victim of identity theft, place a fraud alert and close the accounts immediately. It’s critical that you have a clear understanding of your credit report as your three-digit number and history will play a major role in your life. If you ever want to apply for a loan and be granted a good repayment interest rate generated by a loan repayment calculator, you will need to keep your finances in check and always be alert for strange activity.
Pay your bills on time every month
Whether you pay your bills or not, that is not the deciding factor of whether or not your credit score will reflect positively. It’s about when you pay. Late payment can significantly affect your credit rating more than any other factor can. Usually, you will receive phone calls or text messages to remind you to pay your bills if it’s passed a certain date, but over time, these late payments will shine a negative light on your creditworthiness. In order to change this, try to set up automatic payments or make sure you stay on top of your expenses before being told to pay. Each on-time payment will update on your credit report. If you’re able to, prolong your application by working on your credit rating for as long as possible. This way, you will be able to be approved by several lenders, and receive a higher loan amount with a lower interest rate.
Try to contribute to your total balance every month
It’s important to pay the amount due each month but it’s even more important to pay that and more. If you’re only contributing to the interest rate, you will never actually lower your balance. Lenders want to see that you can pay off your balance every month. If you’re able to completely squash a credit purchase once you’ve been paid, you will be able to boost your score and improve your credit history. Lenders scrutinise your debt and this significantly influences your credit score. If you cannot afford to manage your current credit allowance, do not agree or accept an increase in credit for any reason. You will only put yourself in further debt, and the more you owe, the more interest you will pay on the repayment value.
Use credit, but within reason
If you want to purchase a vehicle, which is a large purchase, your credit score needs to be high and positive. A positive rating will improve your personal loan calculator value, allowing you to qualify for more financing with a lower interest rate. If you have savings and can put those savings towards your loan, it will make your chances even better. Banks and lenders want to see years of credit usage and they want to see that you are able to manage your finances responsibly. You need to get into the habit of saving for large items and not using your credit card for large purchases. Keep track of your spending and try to stick to a monthly limit that you are able to afford to pay back each month. Be wise with your credit options. The deeper you go into your credit, the longer it will take to pay off because of the interest.
Once you have improved your credit score, you can research ways to get a first time approval on your vehicle loan. Not having to pay off your credit with growing interest each month will allow you to use that extra money towards a vehicle deposit. The bigger your deposit, the lower your repayment value will be.
As important as credit is, it’s even more important to stay ahead of your finances if you want to achieve other goals in your life. There is always a way forward with a poor credit score rating. Check your credit rating today and start making a change for the better. It will be worth it in the long run.