Your credit score is important. Not only can a good credit score help you get the best rates on loans and lines of credit, but it can make other parts of your life easier as well.
Consumers with stellar credit ratings typically have no problems when it comes to renting an apartment or signing up for a cell phone contract. They may even save money on their car insurance. However, people with low credit scores often struggle with any type of service that involves a credit check. And, except in the states that won't allow it, they normally pay more for their car insurance policies.
So, the recent news that approximately 12 million Americans may be getting a modest credit score boost in July is good news. Granted, this represents only a small percentage of the 200 million people in the U.S. who have credit scores. But the majority of the consumers who'll get this bump in their rating are dealing with bad credit, so this change will likely help those who need it the most.
Why Some Credit Scores will Rise in July
The three main credit bureaus, TransUnion, Experian and Equifax, have often been criticized for the surprisingly high amount of errors found on credit reports. And a lot of these mistakes have to do with information pertaining to tax liens or civil judgments.
For several years, lawmakers and consumer advocates have been putting pressure on the bureaus to fix credit report errors that might be bringing down consumer ratings. Finally, in 2015 the three agencies reached a settlement with 31 states and agreed to make policy changes.
This latest development will go a long way toward meeting the terms of the settlement. Starting in July, tax liens and civil judgments listed on a person's credit report must include the following three pieces of information:
- The consumer's name
- Their mailing address
- A valid social security number
If any of this information is missing, the item must be removed from the credit report. And because tax liens and judgments are both heavily weighted when credit scores are calculated, these removals could give affected consumers as much as a 20-point boost in their scores.
Of course, this is a modest jump. But, for subprime consumers who are working to improve their credit, every point counts.
Other Ways to Improve Lower Credit Scores
Obviously, this change in credit report standards won't actually "fix" anyone's bad credit. Credit repair is possible, even for those with severe credit damage, but it takes time and effort. However, here are a few ways to get started with a credit improvement plan.
- Pay all bills on time. If you're behind on any of your payments, now is the time to get current and stay that way. Late and missed payments can hurt your credit rating a lot and make future lenders see you as a risky borrower.
- Apply for a secured credit card. With a secured credit card, your cash deposit becomes your spending limit. This allows you to use and build credit without incurring debt. Making regular, small purchases with a secured card and paying the balance every month can promote gradual improvement in your credit score.
- Purchase a vehicle with a bad credit car loan. If you need a car, buying one with cash will do nothing for your credit score. But financing your vehicle with a bad credit auto loan will give you an opportunity to improve your credit by making timely payments.
Easier Auto Financing for Car Buyers with Bad Credit
If you would like a chance to improve your credit by purchasing the car you need, Drivers Lane can help. We can match you with a local dealer that can work with unique credit situations. In fact, you may be able to buy your vehicle with little or no money down.
We offer this service because we believe that everyone should have a fair chance at auto financing. And to make it even easier, our service is free and comes with no obligations. Go ahead and fill out our simple and secure car loan request to get started today.