Helpful Tips and Tricks to Achieving and Maintaining Good Credit

Helpful Tips and Tricks to Achieving and Maintaining Good Credit

A good credit score is key to getting a lower interest rate on a car loan. If your credit score is low, a loan company could deny your application, or offer you a loan with a high interest rate. To make things easier for you, we have offered a few helpful tips and tricks to achieving and maintaining a good credit score.

What Is a Good Credit Score?

The credit score range is 300 to 850.

  • 300-629: A score in this range is considered bad. In most cases, it will be difficult to get credit if your credit score falls in this range

  • 630-689: A score in this range is considered fair. Lenders might offer you credit but at higher interest rates

  • 690- 719: A score in this range is considered good. Lenders would be ready to offer lower interest rates for loans

  • 720 and above: A score in this range is considered excellent. You will have access to most credit programs and also get the lowest interest rates.

How to Find Your Credit Score 

Your credit score will fall in one of the credit score ranges mentioned above. Most credit cards and loan companies provide current credit scores to their customers for free. The credit score is generally mentioned on the monthly loan statement or the credit card bill sent to the customer. If your monthly loan statement does not mention your credit score, you can use any credit score service to know your current credit score.

Before you approach a lender, find out your credit score. This will help you bargain for lower interest rates, provided your credit score is good or excellent. Here are some tips to improve your credit score:

Make Your Payments On Time

Defaulting on loan payments is extremely bad for your credit score. If you default on loan payments, the lender can refer your loan account to a collection agency for recovery. This gets reported to the credit bureau and also gets mentioned on the credit report. If you want to improve your credit score, treat all loan payments equally and pay all loan installments on time. 

Keep Your Credit Card Balances Low

High credit card utilization increases your debt and it affects your credit score. People with high debt generally have a lower credit score. According to financial experts, you should strive to keep your credit card balances lower than 30 percent of your credit limit to improve your credit score. If you have multiple credit cards, consolidate all credit card balances and work towards reducing the balance through timely payments. Also, you need to strive to make full payments towards your credit card every amount. If you make a partial payment or minimum payment, it increases your credit card balance, which affects your credit score.

Check Your Credit Report

Sometimes an error in reporting also affects your credit score. For example, if a credit card was closed by the credit card company and it is reported as closed by the account holder, it will affect your credit score. In such cases, you should contact the credit bureau and bring such errors to their notice. You will be required to submit supporting documents to support your claim.

Achieving a good credit score is simple, provided you curtail your expenses and save more money and use it to reduce your debt. The tips given above provide you the information you need to improve and maintain your credit score.