in

7 Tips to Keep Your Loan Credit Score Clean

Your credit score is one of the most important metrics that lenders and other businesses use to assess your financial reliability.

It’s also one of the fastest ways to sabotage your ability to get any kind of loan at all, whether it’s for a home or for an automobile.

When you take out a loan, it’s almost certain that you’ll need some help from others to make ends meet, so it pays to keep your loan credit score as high as possible at all times.

Follow these tips to keep your loan credit score squeaky clean.

1) Stay on top of bills

Being organized and on top of bills is the best way to maintain a good credit score. Whether you owe money or not, always send payments in a timely manner and make sure your address is up-to-date.

This will show lenders that you’re responsible and likely more trustworthy.

Use caution when applying for new loans, when trying to get approved for a loan, you’ll have better luck if you keep your current debt low and save as much as possible before borrowing more money.

For example, if it’s your goal to buy a home in 3 years but you want to pay cash for it, it might be wiser to work towards saving enough now than just taking out a 30-year mortgage.

If you wait too long, you could find yourself with no equity because interest compounds over time! Finally, don’t apply for multiple loans at once.

Applying for multiple loans can damage your credit score by making it appear as though you’re maxing out your available funds.

Instead of applying for a $5K personal loan and then also asking for $5K from a line of credit, simply use the line of credit first (or vice versa).

2) Don’t close old accounts

It’s tempting to close an old account that you no longer use, but this can actually negatively affect your credit score.

When you close a credit card or other account, the line of credit associated with that account is also closed.

This means that if there are any outstanding balances on the account, they will be included in your debt-to-credit ratio calculation.

This can push your ratio higher and lead to a lower score.

Plus, closing an account reduces the average length of your accounts which may also have a negative impact on your credit rating.

If you decide to cancel unused cards or accounts, do so gradually by gradually reducing their limits instead of closing them outright.

And remember to continue making payments on the remaining balance until it’s paid off before canceling it.

Pay bills promptly: Late payments not only hurt your credit scores, but they could cost you some major money as well.

Make sure all your bills are up-to-date and avoid paying late whenever possible.

3) Use your cards frequently but wisely

Your credit score is a three digit number that ranges from 300-850. Higher numbers indicate a better credit history.

Lower numbers indicate poor credit history.

You can check your own credit score for free by visiting any of the major credit card company websites and entering your information.

If you find out that you have a low number, don’t panic! It’s not too late to improve your credit rating.

Here are a tip to help boost it:

1) Use your cards frequently but wisely: Make sure you use your card at least once per month in order to maintain an active account with a strong credit limit.

4) Get all the extra fees waived

When you’re getting your loan, keep an eye out for any extra fees that may be tacked on. These can include things like application fees, processing fees, inspection fees, and more.

Make sure you know about these upfront and don’t agree to them unless they’re necessary! Also make sure the interest rate is within a good range for you.

As a bonus, when it comes time to refinance or renew your loan, these fees will be waived so it’s worth asking about them up front! If you have credit card debt, consider refinancing

If you are carrying credit card debt in addition to your home mortgage, consider refinancing with a company such as SoFi who offers rates from 3-8% APR (compared to standard rates of 15%+) and has no closing costs. You can get started by clicking here.

5) Close any unused card accounts

If you have a credit card that you no longer use, it’s important to close the account. It will reduce your total credit limit and show that you’re managing your finances responsibly.

Make sure all monthly bills are paid on time, which includes things like cable bills, utilities, cell phone plans, insurance premiums and loans.

Always pay more than the minimum payment: You should always pay more than the minimum payment due on your loans or cards each month.

Paying more than the minimum balance can save you hundreds of dollars in interest charges over the life of your loan.

The additional payments may not seem like much now, but they add up quickly. Try living on half your income:

If possible, try living on half of your income for one month and saving the other half in a savings account until you reach financial goals.

6) Monitor your collection account activity

It’s a good idea to check your collection account activity on a regular basis.

Checking your credit report regularly can also help you catch any errors that might be lurking there.

It’s also important to know what accounts are included in the calculation of your credit score and how they are weighed in the equation.

A bankruptcy or foreclosure, for example, will negatively affect your credit score much more than an unpaid gas bill.

If you have debt collectors harassing you, it may be time to take action by filing a complaint with the Federal Trade Commission or contacting a lawyer who specializes in debt defense.

There is no statute of limitations on collecting debts; so even if the original creditor has long since given up, another collector may have bought the rights to collect.

7) Stick to your budget

If you stay within your budget, it will be easier for you to maintain a good credit score. Think of it like this: if you always spend less than what’s in your bank account, then you’ll never have a negative balance and never have any overdraft fees or late payments.

These two things can significantly lower your credit score so it’s best to avoid them at all costs! Make sure that you only take on debt that you know that you can handle; otherwise, it could end up being much more difficult to pay off the debts on time.

You should also be wary of borrowing money from friends or family members because these debts are considered personal loans which are not reflected on your credit report.

What do you think?

Written by xclusive

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading…

0

QUIZ: Can You Guess What Type Of Music Each Person Is Listening To? Trivia Quiz

5 Ways To Avoid Taking Out Loans as a Teenager