Emergencies can happen, and you never know when you may have to borrow money if you’re down on your luck. In the lending world, credit scores can oftentimes be the make it or break it factor when it comes to getting approved or even securing a loan at the lowest rate and best terms available. If you want to know how you may be able to improve your credit score before you apply for a loan, here are a few things you can do to start seeing better results in the future.
Step 1: Understand what a credit score is and how it can affect you.
The first thing you should know is the role credit plays in the lending process. A credit score is a mathematical scoring systems credit bureaus use to determine how likely someone is to responsibly manage and repay their debts. Credit scores range between 300 and 850. The lower your score, the bigger flag it sends to lenders that you may be a risk. A bad or low credit score are those usually considered under 600, a score of 600 to 649 is poor, 650 to 799 is fair, 700 to 749 is good, and 750 to 850 is considered excellent credit.
Step 2: Keep your number of inquiries low.
When you apply for a loan or credit, another thing you should keep in mind is the number of times you apply. For most loans and all credit accounts you apply for, lenders will send an inquiry to credit bureaus to help them in the decision process of approving your loan. If you want to improve your credit score, a good rule of thumb is to keep the number of inquiries that appears on your credit history low. Inquiries stay on your credit report for two years. The less inquiries, the better your credit score. So rather than trying your luck with multiple installment loan or cash advance lenders, do adequate research on the loan types, terms, and ask questions to their representatives. Then after you’ve narrowed down your list, pick one or two companies (or loans) you’ll most likely get approved for to keep your inquiries low.
Step 3: Maintain good standing on your accounts
The last and most important thing of all is to maintain good standing on your accounts. As you obtain new loans and borrow more money, it’s important to make all of your payment deadlines as that is the best way to build good credit. Some loans are known to help improve your score if the lender you choose reports any positive account activity back to credit bureaus. If you’re not sure if the loan you’re applying for can help your credit, be sure to consult with your lender. Also pay any past due accounts and any legal records on your credit report to improve your score. Legal records like tax liens, bankruptcies, court judgments, etc. reflect negatively if they’re on your credit report.
As you can see, there are a few things that can be done to help you see improvements in your credit score going forward. However, if you’re in a jam and don’t have enough time to work on your score, there are still viable options for you.
Getting a handle on your money takes time, and Always Money Finance understands. For over 20 years, Always Money has been a regional leader in providing affordable credit solutions to customers across the southeast looking for a convenient and confidential way to meet their needs. If you’re in a jam and need immediate help, any of Always Money’s small personal loan options may be just what you need to get you going in the right direction.
To get started,
- Visit a store near you (Click here to find the store nearest you),
- Call 1-888-618-9217 to get pre-approved over the phone, or
Related article: Can I get a loan with no credit or bad credit?
