Improving Your Credit Score for Personal Loan Approval
Updated: Oct 8, 2021
Your credit score is like a billboard sign for your financial health. It’s one of the first things mortgage lenders and bankers look into before considering anyone for a loan. Because some investments significantly cost a lot, you would need to build your credit if you are ever planning on investing in a home or a business in the future.
You need to get your credit scores up because a higher credit score can also open the door to the lowest available interest rates when you borrow. There are many ways you can improve your credit score, like diligently paying your minimum balance or paying off credit card balances as soon as you’re able.
The key with credit scores is for lenders to see you are a diligent payor with a reliable source of income, making wise financial decisions. Creditworthiness is affected by your payment history, length of credit history, debts, loans, and types of credit an individual avails of.
Thankfully, it is never a lost cause to have a good credit score early in life. You just need to make wise and strategic financial decisions to help you earn, save, spend, and invest well towards improving your credit score.
Here are some tips you can adopt to boost your credit score now:
Pay Credit Card Bills Wisely
Your credit use is the proportion of your available credit limits that you are currently consuming at any given point in time. A good rule of thumb is to not use more than 30% of your credit card limit on any one card, but top scores use less than 7%.
Paying off debt before the payment cycle ends, or often paying during the month, keeps your debt balance low. With this in mind, the moment you use your credit card for a purchase, set your schedules straight to be able to repay at least the minimum monthly balance on time.
Life happens, but excuses won't cut it when it comes to paying off your loans. It is why you should not borrow more than 30% of your credit limit to anticipate and prepare for moments of crisis.
Even if you should have unexpected expenses in a month, you should still set aside a plan of action that does not influence your credit score. Do a self-check of these documents in depth so you can refute any errors you find and start credit restoration immediately.
Get Rent and Utility Credit
You may improve your credit score by having your on-time rent payments reported to credit bureaus. A prospective creditor will see your rent records, and a lengthy history of consistent payments can definitely improve your credit score.
It takes no additional setup time, and it boosts your credit score quickly. Although some lenders require at least a two-year payment history, it still is a wise way of improving your credit scores quickly.
It’s essential to start building credit if you have none because a good credit history helps you buy a car, rent a house, or even apply for a job. You can apply for a credit line and begin using it to pay for your monthly utilities and costs on time.
A word of warning, though: if you're not careful, credit utilization may hurt your score. But if you budget properly and utilize credit wisely, you can establish a good credit score and expand your financial options.
Opelika Finance understands the urgency of financial assistance when you need it. That said, we offer you same-day personal loans with simple repayment arrangements. When it comes to your finances, we can help—reach out today!