People often save up for years before a big purchase. You may be dreaming of buying a new car, a house, or another property. However, keep in mind; your credit score affects your purchase.
Making a big purchase can be complicated and stressful for you. Thinking about credit may seem like an added task. Some of you might even believe that checking your credit report will hurt your score.
That’s not true. In fact, checking your score is a soft report which does no harm. It is a good idea to be aware of your credit situation before making a purchase, as it can impact interest rates and other factors.
1.Suspicious activities and red flag
Several people have been able to identify a suspicious activity by checking their credit report regularly. These activities can potentially harm your credit score. If you don’t identify a negative activity in time, your credit score will decrease significantly.
A low credit score will give you high interest rates for any loan application you file. In fact, your application may even be rejected on this basis.
2.Payment of bills
Your payment history reflects your ability to pay off a loan. If you want to make a big purchase soon, make sure your bills are all paid in time. If you can’t manage this, clear the minimum payments at least.
Try to make all the payments much before the due dates, so they get cleared in due time. If your history shows delay in payment, a quick credit repair trick is to wait a few months before applying for a loan while paying your bills on time, in the mean while.
Your credit score depends on how you utilize the available credit. A utilization ratio is calculated with outstanding balance and total available credit. A fast credit repair trick is to minimize your credit utilization.
Keep this ratio below 30 for a good score. This will show your lenders that you don’t overspend.
If you have established spending limits, you are capable of paying off any loans you take.
4.Don’t shut down your old accounts
Your credit score depends on the length of time you have handled credit. Even if you’re not using your old accounts, keep them open. A longer positive payment history can do wonders for your interest rates.
The length of time will show your creditors that you are good with handling credit. It shows that you are savvy in your purchases. This way, they feel more at ease offering you the loan.
Keep these tips in mind whenever you decide to make a huge purchase or investment. Even if you’re currently not buying a car or property, make sure to keep an eye on your credit. It is easier to dispute errors on your credit report in time than several months later.