Are you looking to improve to great credit score? Want to max out your score in advance of getting an auto loan? Want the lowest rates possible when you next get a credit card or loan?
Our Smithville auto loans teak outlines the 7 steps you can take to achieve great credit score. It takes time, but anyone can do it!
- Set a monthly spending budget – Setting a sensible spending budget for every month is a great way to learn to live within your means. You know your income, outgoings and how much you can save and spend each month. This should help you manage everything else in this list and is the first step to earn great credit score.
Setting a spending budget sets your expectations going forward. Having savings should prevent you going into debt in an emergency and it’s always good to have a plan.
- Set up automatic payments for everything – Make sure all your outgoings are covered by automatic payments so you never miss one. Your payment history has a huge influence over your score so this is your first task.
Even if you’re the most organized person in Canada, our lives are busy and things get in the way. Never miss a payment for maximum credit score gains.
- Get at least two credit cards and use them – Use a two or three credit cards for everyday purchases. Only buy things you would buy anyway and make sure to settle the balance each month. This adds to your payment history and credit mix.
The key here is to not spend what you wouldn’t otherwise spend. Get gas, groceries and whatever else you buy regularly. Then pay it off in full each month to avoid paying interest.
- Request higher credit limits – Once you have had the cards for a while, request a higher credit limit but don’t use it. The more credit you have available but aren’t using, the better your credit utilization ratio.
Your credit utilization calculates how much available credit you’re using. Having higher credit limits but not using them turns that ratio in your favour, which increases your credit score.
- Only apply for credit when you really need it – Credit applications require hard inquiries on your credit report, which can cause it to dip. Avoid applying for credit until you really need to.
The impact of a hard inquiry is minor but it still dings your score. Minimizing these as much as possible will also help when it comes time to borrow as you’ll look good to lenders.
- Keep an eye on your credit score – You should check your credit score regularly. Keep an eye on how you’re performing, watch the steady rise in credit score, watch for errors or mistakes and monitor for identity theft or credit fraud.
- Get an auto loan when you’re ready – We wouldn’t recommend an auto loan purely to help your credit score but it can help. Set up automatic payments, service the loan successfully and you will help increase your score.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!