Your credit score is one of the most important aspects that determines how much you can qualify for when applying for a loan.
Here are the credit tiers to gauge where you stand:
- Excellent Credit: 750+
- Good Credit: 700-749
- Fair Credit: 650-699
- Poor Credit: 600-649
- Bad Credit: Below 600
Building your credit is not a quick or easy process, but it is possible with some careful thought and help from your loan officer! Here are some tips that you can look at to ease the process of improving your credit score and to make sure you are headed towards the right direction.
1. Regularly Check Your Credit Report
The first step to improving your credit score begins with checking your credit report frequently. A few places you can check your credit report are Experian, Equifax, and TransUnion. Your credit report will reveal to you why you have the credit score you have. But don’t always fully trust your credit report! Make sure to go through them thoroughly to check for any inconsistencies.
It will help to ask yourself these questions:
- Is all your personal information correct? (includes your social security number, birth date, full name, and address)
- Are all of your credit accounts being reported?
- Are there any late or missed payments listed that you remember making on time?
- Are there any accounts or applications for credit you don’t recognize?
- Are there any items from decades ago still appearing on your report?
2. Pinpoint What You Need to Improve
After analyzing your credit report, make a list of what went wrong so that you know where to pinpoint what you need to improve.
One of the biggest contributing factors to your credit score is whether you are making your credit payments on time. Creditors see you as a bigger risk when missed payments become a habit. A history of missed payments will make creditors skeptical towards allowing you to take on more credit. If this is the case, try setting up payment reminders to help you pay your bills on time.
3. Create a New Game Plan
This new game plan will help you improve and maintain your credit score. To begin improving your credit score, you should aim to keep your credit card balances on the lower end along with any other type of revolving credit you may have.
This may involve fixing your late payments first to get yourself back on the right track. You can try asking your credit card issuer if they can fix a late payment. Credit card companies are usually pretty forgiving if you have a long track record of making on-time payments.
Don’t let past mistakes keep you from improving your credit score. Improving a credit score takes time, but it’ll be completely worth it. Since the process is not a quick fix, the best thing to do to improve your credit is to manage it responsibly over time and to get tips from your loan officer.