Helpful Tips and Tricks to Achieving and Maintaining Good Credit
Maintaining a good credit score is necessary to get lower interest rates on auto loans. If your credit score is low, you look more like a risk to auto loan lender and there are chances your car loan application might get rejected. To make things easy for you, we have discussed a few simple tips and tricks to achieve and maintain a good credit score.
Know What A Good Credit Score Is
Before we share tips to achieve and maintain a good credit score, it is necessary to know what good credit score is. According to financial experts, the credit score range from 300 to 850. If you have a credit score of 690 and above, most auto loan companies would be happy to offer you good interest on the loan. If you have a lower credit score, the lender might offer an auto loan with a higher interest rate. If you have a bad credit history, your loan application might also get rejected.
How to Check Your Credit Score
If you have taken a loan or use a credit card, check the monthly statement which might have your credit score mentioned. If your lender does not provide you credit score information, you can use any credit score service to find your current credit score. It is always a good idea to know your current credit score before applying for a loan so that you know what your financial standing is. A good credit score gives you bargaining power and you can ask the lender for lower interest rates.
Here are some tips to improve your credit score and maintain it:
Don’t Delay Payments
The first rule to follow is you should never delay any payments, That includes not only your loan payments and credit card bills, but also utility and cell phone bills. If you are consistently late on payments, your account could get referred to a collection agency and reported to credit bureaus. The result is a significant drop in your credit score. You should make it a point to pay your bills on time every time. This will go a long way toward achieving a good credit score.
Avoid High Credit Utilization Rate
You should avoid using all available credit limits on your credit card. According to financial experts, you should always use 30 percent or less of the credit available to you. A higher credit utilization rate will affect your credit score.
Don’t Close Old Credit Cards
You should not close old credit cards, even if you are not using them. The reason is old credit cards are proofs of your long credit history and account for 10 percent of your credit score.
Consolidate Your Credit Card Balances
Having multiple credit cards and small balances might seem like a good financial decision but it isn't. This strategy can backfire if you overuse it. A simple way to improve credit score is to consolidate your credit card balances and make one payment toward your credit card balance.
By following the tips given above, you can improve your credit score and improve your financial standing. Having a good credit score can help you get lower interest rates on a car loan and help you save a significant amount of money in the long run.