Things happen, and sometimes your credit can take a hit. Even if your credit score drops, you can get it to improve over time with the right plan in place.
Improving Your Credit
Your credit won’t be fixed overnight, but, given time, there are many different ways you can improve it. Boosting your credit will benefit you if you plan on taking out a loan or applying for a credit card. Without decent credit, you may not have many options available.
Here are some of the best ways to rebuild your credit:
- Pay every bill on time – To a lender, showing consistent on-time payments on all your bills says that you’re serious about meeting your obligations.
- Limit hard inquiries – Each time a lender pulls your credit report, it’s a hard inquiry. Multiple hard inquiries will affect your credit score. To limit these, only apply for credit when you absolutely need to.
- Keep credit card balances low – Keep your credit card balances at or below 30 percent of their limits. In addition, keeping these accounts open, even when they don't have a balance, is another way to improve your credit.
What if You Have No Credit?
On the flip side, if you have no established credit, you'll need to take a different approach to building credit. One of the easiest ways to establish credit is to apply for a credit card. But if you don’t qualify for a regular one, here are other options to consider:
- Secured credit card – Secured credit cards work and act like any other credit card. The biggest difference is that these cards are tied to a savings account. The money you put down becomes your credit limit.
- Become an authorized user on a credit card – Popular among teens and young adults, you can be an authorized user associated with someone who has a good credit history, such as a parent or guardian. Their good credit then becomes part of your credit file.
- Ask for reported payments – If you pay rent and bills consistently, ask a landlord or company if they can report your positive payment history to the credit bureaus. Not every landlord and utility company will do this, but it never hurts to check with them.
What if You Can’t Wait?
Your credit influences the lending options you have to work with. The lower the credit score, the fewer options there will be. It takes time to rebuild or establish credit, and sometimes, you don't have the time. If you’re in need of a car loan, but worry your credit is getting in the way, let Drivers Lane help.
At Drivers Lane, we work with a nationwide network of special finance dealers who have the lending specialists available to work with people who have credit challenges. Begin today by filling out our free, no-obligation auto loan request form.