It can be really hard to raise your credit score quickly enough to secure a loan. It will be even more difficult if you are young and have a short credit history. While you cannot expect any changes to happen overnight to your credit, you can start taking positive steps today to build a better credit history. Follow these tips to improve your credit score and secure a loan.
Start by checking your credit reports. You can receive a free credit report once per year from each of the three main credit bureaus. Be sure to check your reports to ensure that they do not have any errors.
Next, pay down credit card balances to below 30 percent of your credit limit to work up to your highest possible score. If you have high balances, you will seem like a liability to a new creditor.
Remember always to pay on time even if you can only afford to make the minimum payment. One late payment can significantly lower your credit score.
Be sure to keep credit cards open. When you close a credit card, your score takes a hit because it appears that you have lost a great deal of credit.
Consider opening a personal loan. While you will have to pay some interest on this new loan, you can use it to diversify your credit report and to prove that you can make payments on time. Choose a lender that provides loans to those with bad credit, such as Loan Connect.
When you open a secured credit card, you will make a deposit of money that will then be used as your credit limit. Therefore, this method is safe for both you and your creditor and can significantly improve your credit score over time.
Finally, if you have a parent or a spouse who is willing to add you to a credit card, you can become an authorized user. You can also consider being a cosigner for a loan. Either of these options will allow information to be posted to your credit report.
If you follow each of these tips faithfully, you should expect to see some good changes to your credit history within six months. The longer you practice good habits with your credit, the better your history will be. Use your free annual credit checks wisely, and you will be able to keep a close eye on your score without have to shell out cash to get your questions answered. Also, check with your credit cards as many now offer free FICO credit scores on monthly bills.