Your credit score is a numerical rating that determines your creditworthiness. In other words, it lets lenders know how reliable you are as a borrower. Not only can a bad credit score lead to application denials, but it may also increase your interest rates in the long run. There are some basic steps you can take to increase your credit score.
According to myFICO, the first thing you should do is regularly check your credit score. You can get a free copy once every 12 months by going to annualcreditreport.com or you can sign up for a service through a company by paying for your score. It’s important to stay up-to-date so you can notice any inconsistencies on your report, an issue that happens more than you might think.
Next, pay your bills on time and sign up for autopay. Payment history is the largest factor in your score (about 35%), which means that if you miss payments it can have serious consequences. If you are having trouble paying bills, contact creditors and/or seek a credit counselor.
You should also keep balances low on “revolving credit” accounts, like credit cards, and don’t open too many accounts too rapidly. Many young creditors try to improve their score by opening more accounts, but this can backfire if you borrow too much at one time. If you do get new credit accounts, try to focus on positive types of credit like mortgages or student loans, as opposed to credit cards.
For more information about credit scores or financing, talk to our experts in the finance department at El Dorado Mazda. Our goal is to get you behind the wheel of your dream car and save you as much money as possible. Maintaining your credit scores is one of the best ways to do that.