If you’re thinking about making a big purchase next year, now’s a great time to give your credit score a boost. Whether it’s a new home or a college loan, you’ll need great credit if you want to get the best interest rates.
Educate yourself first
First things first, know your credit score. Ranging from 300-850, the higher your credit score is, the better you’re doing. The best interest rates and terms will go to people with credit scores of 740 and higher. You can pull your credit score for free once a year from Equifax, Experian and TransUnion. Visit www.annualcreditreport.com to get all three versions at once.
Once you have your credit report, go over it carefully to make sure there are no errors. If you find any problems, contact both the credit-reporting agency and the company that made the error. Report the incorrect information and provide supporting documents.
Be prompt and pay in-full
Looking forward, get into the habit of paying every single bill on time, and in-full whenever possible. You’re paying huge amounts of interest by not paying off credit cards. Not to mention, your credit score certainly isn’t getting any better! If necessary, transfer balances from your high-interest cards to a lower-interest card to alleviate some of the extra money you’re paying each month.
Think before you act
Before you open a new credit card to pay off other debts, stop and reevaluate! Rapidly taking on new debts and credit cards counts against your score, so be thoughtful about taking on new credit cards and loans. (Opening new lines of credit does boost your score if done infrequently.) Another tip for improving your credit score is to make sure you only use a small amount of the credit available to you.
Adopting good spending habits and paying your bills on time and in-full is the best way to improve your credit. Unfortunately, it won’t happen overnight. Be patient, and you should start seeing results within a few months! A good loan officer will help you create a plan of action if you need help getting started, so get in touch with someone well in advance to make sure you’re in a good spot by the time you’re ready to take out a loan.