HOW TO IMPROVE YOUR CREDIT
At KO Auto Finance, we offer financing for all credit types – but rebuilding your credit is still important for your future as many lenders will not approve customers with bad credit or no credit.
Why is Your Credit Score Important?
Having a good to excellent credit score will save you money as you will receive better rates on mortgages, auto loans, and everything that involves financing. People with better credit are considered lower-risk borrowers and those with poor credit are considered higher-risk borrowers. Having a poor credit score can affect your ability to get approved for a house, a car rental, insurance, etc. Although in some cases, it’s not impossible to get approved – it does make the process more challenging.
How to Rebuild Credit
Check Your Report
To improve your credit, you should have an idea as to what might be helping your credit, and what may be hurting it. You can pull a copy of your credit report for free through Equifax, Credit Karma, or Transunion. This report will show you any loans you currently have, your credit card balances, missed payments, etc. Take a look at your report and see where you can improve – or dispute anything that you think is inaccurate.
Monitor Your Payments
Your payment history is the most important factor for your credit score. Ensure that you are always making your payments on time and make at least the minimum payment if you can’t pay the full amount that you owe. If you are having trouble paying a bill, contact the lender right away rather than wait for it to hit collections as this will negatively affect your score.
Avoid Overusing Your Credit Card
It’s crucial that you do not go over your credit limit. Borrowing more than the authorized limit on a credit card can lower your credit score. If you use a lot of your available credit, lenders see you as a higher risk. This is true even if you pay your balance in full by the due date.
Keep Credit Card Accounts Open
Consider keeping an older account open even if you don’t need it and use it from time to time to keep it active. Make sure there is no fee if the account is open but you don’t use it. Having a credit account, a $0 balance, or a low balance will help you score.
Avoid Too Many Credit Applications or Credit Checks
It’s typical to apply for credit from time to time. Lenders and others will pull your credit when you are applying for a loan, but if there are too many credit checks in your credit report, lenders may think that you’re desperately seeking credit or attempting to live beyond your means. To limit the number of times you apply for credit, get your quotes from different lenders within a two-week period when shopping around for a car. Your inquiries will be combined and treated as one inquiry for your credit score. Apply for credit only when you really need it
We offer consulting services to help you rebuild your credit. The experts at KO Auto Finance will work with you and provide professional advice to help get your credit back on track! Contact us today to apply for financing, or to book a consultation.