10 Simple Secrets to Improving Your Credit

10 Simple Secrets to Improving Your Credit

 

When it comes to financial security, credit scores are as important as your bank balances. Your credit history and score will influence all future credit purchases, whether it’s buying a car or anything else you need to finance. It will affect the likelihood of acceptance, as well as the deal you’ll be offered; therefore, the higher your credit score is the better off you are.

 

Sadly, not only does a low credit score limit your financing options, it can be quite difficult to rebuild. However, there’s no need to throw the towel in just yet. We at Eden Autos put together this list of things you can do to improve a low credit score. By following these recommendations, you could start climbing the credit score ladder in no time, giving you greater ability to secure future loans, not just for cars but for any large purchases.

 

1. Use Credit Cards Wisely

A low credit score can scare you away from utilizing your available credit. In reality, showing that you’re capable of borrowing money in a mature way is a key factor. It will help to pull you out of the hole and towards a brighter financial future. Credit cards can be the perfect solution. Using credit in a positive fashion is far better than ignoring it altogether, especially with credit cards. In an ideal world, however, you should aim to access only a small percentage of your available credit limit. Stick to under 30% and the low credit card utilization will ultimately bring positive results for your score.  

 

Increasing your credit limit can help, provided you don’t make it so high that it stops you from borrowing money in other areas. As for credit card usage, it’s best if you get into the habit of only using it for one type of purchase. This could range from gasoline for the car to online purchases. Either way, small monthly amounts that you can pay off in full are the solution. On a side note, taking this approach provides far greater benefit because it enables you to avoid late fees and increased interest rates from late or missed payments.  

 

2. End Store Card Addiction

While credit cards can be very useful tools for improving low scores, it’s important to know that not all cards are good. Store cards can be a particularly bad idea, not least because they are often used to purchase items you may not really need. Besides, it’s very easy to forget about those payments, which would then lead to greater debts and an even worse credit score.  

 

Even if you do learn to use store cards in a positive fashion, it’s probably best to steer clear of them. This is because having too many sources of credit can become a negative factor that lenders, as well as the credit rating agencies, might hold against you. Moreover, making several applications for further credit could limit the progress you made in other areas. There’s nothing wrong with applying for credit, but you’ll want to save it for more important elements. For this reason, avoiding store accounts is a useful method for anyone wanting to boost their score. Settle the accounts and stop using them. Aside from anything else, it’ll be far easier to manage your finances when future purchases are restricted to credit cards. If you can use those cards in a responsible manner, though, it’s fine to keep them on your reports.

 

3. Take A Consolidation Loan  

Clearing debt with additional debt sounds very counterproductive, however, it’s actually one of the greatest tricks in the book. Firstly, it will help you regain control of your financial situation, as it’s far easier to manage one account rather than several. Better still, it could actively aid your credit score.

 

Once again, having a limited number of accounts can work in your favor. Not only does it mean you have fewer commitments, it’ll probably mean you have a reduced amount of available credit. This should also mean there is a far lower level of temptation connected to irresponsible financial behavior, and the benefits certainly don’t end there. It’s always worth noting that APR’s are often higher on smaller loans. Missed payment charges and late fees are likely to cause major problems for your credit score, as well as your ongoing finances. If nothing else, a consolidation loan will feel like a major commitment. As such, this should have a positive influence on your mindset. In truth, this is the greatest tool at your disposal, and should not be underestimated for a second.

 

4. Show No Signs of Risk  

Credit histories are used primarily to help lenders determine whether an applicant poses a risk. Therefore, one of the best things you could possibly do is learn to avoid any activity that may suggest you could be a problematic applicant. If you have accounts with regular payments, you should try to avoid reducing the monthly payments. When this happens, it suggests that you may be having problems meeting your current financial obligations. In turn, this will bring negative impacts to your credit score, which could mean either slower rebuilding, or even a decline.

 

Another thing to look out for is where you are spending money. If paying for a divorce lawyer or buying something from a pawnbroker, it pays to use cash. If those types of payments show up on bank statements, they can indicate possible troubles and pending changes. It might not necessarily harm the score, but if it hurts your chances of a loan acceptance, you might to make several applications, which can cause further harm to your credit worthiness. But if your recent habits indicate financial maturity, your score should be reflected in a positive light.

 

5. Verify Yourself

As somebody who is looking to rebuild a low credit score, you’ll no doubt want solutions that are easy and won’t impact your finances. Lenders need to know who they are lending money to, which is why credit ranking agencies also treat identification as a vital factor. Without that verification, your score will suffer. First you should register to vote. Even if you have no intention of voting for the next president or local candidates, this step is vital because it verifies who you are, as well as your address. Meanwhile, maintaining organization goes a long way to helping your cause. This should manifest itself in ensuring that all accounts indicate your current address. Updating old info won’t suddenly see your credit score shoot through the roof, however, it can make a noticeable difference. Apart from anything else, it may help you discover forgotten accounts and forms of credit. Even if the debts on those sources amount to just a few dollars, the failure to clear them has probably been holding you back without you realizing it.

 

6. Buy with Bad Credit

Having bad credit can discourage you from making purchases on credit. Sadly, leaving yourself short of funds due to buying expensive items on cash often leads to far greater damage in the long run. Meanwhile, missing out on essential items that are needed for a comfortable life isn’t a solution either. Buying on credit is the best answer, but only if you do it in the right manner.

 

Getting a mortgage with a bad credit history is virtually impossible unless you have a co-signer with excellent credit. Thankfully, access to other major purchases, including cars, can be far less restrictive. Obviously, with a low credit score, finding the right deals on significant purchases can be difficult, but when you do the rewards are huge. With loan options available for people in your situation, it’s not only possible to make those purchases, perhaps even more important is that you’ll do so while raising your score. Of course, credit scores can only start climbing when you make timely payments. With automated payments and modern banking technology, this should no longer be a problem. Keep this in mind, and you shouldn’t go wrong.

 

7. Fight Inaccuracies

Nothing harms a credit score quite like factually incorrect information. It can confuse the credit scoring agencies as to your identity and history. Today, everyone is entitled to a free credit report every year from each of the three credit reporting agencies, which is something you must look to utilize. Check the information to ensure that addresses, credit balances, and other data are all correct. Mistaken identity can certainly occur, especially if you have a fairly common name. Unless you want your score to be damaged by someone else’s activity, taking care of this issue is very important.

 

Another item to consider revolves around disputes. If a creditor tried to wrongly charge you, it’s not just a case of proving them wrong to void the fee, you also want to ensure that any suggestion of broken agreements is removed from your credit reports. Aside from using the free credit reports to do these things yourself, paid services are available to evaluate your financial situation and help you correct inaccuracies and improve bad financial habits.  

 

8. Don’t Hang Around  

As mentioned above, making multiple applications for credit can serve as a caution for credit scoring agencies. This is because there is a clear indication that you are considering the idea of borrowing more money. For all they know, this won’t end with you next purchase. However, the credit rating programs don’t pick up the applications made within the past 30 days. So, if you are thinking about applying with several lenders before choosing, do it quick. Submitting multiple applications over a few months, and your scores could drop.

 

One solution is to search various internet sites to find who might have the best deals available, then you’ll only do a single application. Keep in mind the deals you see right now might not last forever. So, if you think there is a good opportunity to borrow money in a way that will allow you to repair the score, you should take it.

 

9. Limit New Accounts   

There’s nothing wrong with opening new lines of credit, especially when it is used for the right reasons. Nonetheless, opening several new accounts in a short period of time can backfire, so be careful about new loans and credit cards. The average age of your accounts is also a factor that counts. You may think that increasing the available credit without actively borrowing more will work wonders. While this is true to an extent, going overboard will bring very real repercussions. With this in mind, needless applications as an attempt to increase scores are usually a bad idea. Quality over quantity is always advised. Avoiding the temptation to take the attractive new-customer deal when you already have a suitable lender can make a big difference.

 

10. Understand Credit Agreements   

Nobody purposely sets out to miss payments or encounter issues that will harm their credit scores. In many cases, the negative impacts can come from a lack of information rather than responsibility. As they say, knowledge is power, and understanding your financial agreements is key. You should know that the terms advertised by lending companies aren’t always the terms you’ll be offered. This is especially true when you have a less than good credit score. An advertised low APR is the deal offered to only about 50% of accepted applicants, so you must accept that the other 50% will be paying a higher rate. That means a person with a lower credit score will almost always pay a higher interest rate.

 

Entering any agreement without a thorough understanding doesn’t only leave you open to the potential of a disaster; it also means you are very unlikely to have the best possible deal you could get. While this might not sound quite as severe, it does mean that you could harm your immediate and long-term financial future. This will inevitably hurt your chances of climbing the credit score ladder too. For the sake of your bank balance as well as your credit history, knowing the full details of what you’re signing is key. Otherwise, the positive steps taken above might bring very limited progress.

 

We hope this has helped you better understand credit scores, and how you can improve your own score. If you have questions or would like to talk to one of our professional staff about getting an auto loan, regardless of your credit situation, give us call or stop in to our dealership. We have a large inventory of pre-owned cars and trucks, with financing options for everyone, and instant pre-approval. Our number is 215-977-4772, and we’re conveniently located at 6213 E. Roosevelt Blvd.

Buying a Car with Bad Credit

Buying a Used Car with Bad Credit  

Nobody wants bad credit, but avoiding it is sometimes easier said than done.  

Perhaps you spent more on Christmas shopping than you intended to, causing you to be late on some of your bills. On the other hand, you may be unemployed, or had unexpected medical bills and are unable to cover all of your monthly expenses.  

If money’s been tight for some time, losing your good credit score is a very real risk, but it’s entirely possible to improve your score again, with time and patience. Last year,  more Americans managed to overcome bad credit and elevate their scores.

However, if an emergency comes along, bad credit can only make things more complicated. One of those emergencies can be the need to buy a replacement vehicle for one that’s no longer operational. If you find yourself in that situation, how can you buy a reliable used car with a low credit score? Here are some tips from Eden Autos:

Be Sure You Aren’t Mistaken   

First and foremost, you need to find out what your credit score is. Are you just guessing because of missed payments, or do you know exactly what your score is? You can check your credit score without charge, as everyone is entitled to free reports from the major credit-reporting agencies (TransUnion, Experian, Equifax) once per year. If you need to, you can ask for all three at the same time, or individually over the 12 months instead.  

Get your hands on your credit score as soon as you can, and check it closely. Even if you do have bad credit, it may not be quite as terrible as you imagine, or it may be due to errors you can have corrected. A bad credit score is 629 or lower, while an average is between 630 and 689. Got somewhere between 690 and 719? Congrats – you have what’s considered to be a good credit rating.   

Boost Your Score 

Once you’ve checked your credit score, you can then start to find solutions. Your first step is to have any mistakes fixed as soon as possible. Aside from this, you can rebuild your credit by paying your bills on time, every time, and consider a secured credit card (which demands you pay an up-front deposit) or a co-signed card (your fellow card-holder will need to repay if you fail to).  

You should also make sure you pay every other type of bill on time, too. Though rebuilding the worst scores can take years, buying a used car can be a good way to get on the road to improving your credit.

 

Stick to a Budget 

Used vehicles, sold by reputable dealerships, are often as good as new, giving you a fantastic bargain beyond anything a brand-new car could get close to. However, even if you’re keeping your eyes on the used-car dealerships, make sure you stick to a budget. Assess your finances, evaluate your monthly expenses, and be realistic about the amount you can afford to spend.  

Even if you can’t financially handle a used car with all the latest bells and whistles, getting an affordable vehicle is the crucial thing. Focus on the practicalities and the necessities rather than more superficial factors.  

Choose Your Dealer Wisely 

It’s incredibly important to find a used car dealer who’s willing to work with you, in spite of your credit situation. While it’s fair to expect some rejections if your score falls into a very low level, you can still find used car dealers willing to accept a buyer in your financial situation.  

Some dealerships offer on-site financing and have relationships with banks and lending companies with less-restrictive approvals. There are reputable, high-quality used car dealerships providing reliable financing assistance that allows you to buy the car you really want.

There’s no harm in simply asking, either. Approach those used car dealerships in your area with the best reviews and testimonials, and be open about your situation. Though it might be discouraging, if you persevere chances are you may well drive away with a positive result, regardless of how bad your credit rating is. If you can take steps to boost your credit score through timely payments and correcting potential errors on your report, the dealerships will be more likely to work with you.  

Don’t Forget Fuel Economy 

You got into bad credit because of money issues. Whether there simply hasn’t been enough money to go around, or challenging situations have made meeting deadlines tough, you need to get on top of your finances to improve your rating. Good money-management is crucial, and fuel economy plays a key role in this.  

On top of the repayments to your dealership or loan-provider, fuel costs can be one the biggest expense. This is especially true if you face a long commute to and from work every day. Read up on the most fuel-efficient cars, and take your research with you when you go browsing. Even if you can’t quite find one that has the looks and the efficiency you would like, you need to focus on the practical issues at hand. Work out how much you can afford to spend on fuel each week or month, and factor this into your overall budget.   

Make Sure the Car Won’t Cost More Down the Line  

Adding the cost of extra features to your payments is a definite no-no with bad credit. You want to have as few payments going out each month as you possibly can, and if your used car looks like it may require higher maintenance costs, it may prove to be a false economy down the line. Ask your dealer for a thorough inspection of the car (reputable ones will happily do this for you), or take someone well-versed in cars along with you before you hand over any money. You should be looking for oil leaks, problems with the AC and heating systems, issues with transmission or suspension, and making sure the brakes are in full working order.   

If you have bad credit, you’re not alone, but you need to do everything you can to build your score back up. Buying a good used car with poor credit is entirely possible, but be sure to follow Eden Autos tips to secure the best deal you can.  

 

 

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