Don’t Pull Too Many Inquiries
When shopping for a loan, it may seem reasonable to look around. However, be careful about pulling too many “hard-hits” on your credit. You can pull your own score and know where you stand before you head to the dealership or a lender.
When you make an inquiry on your report it’s not as damaging as when a company does it. Both types of hits will stay on your credit for 12 months. So make sure to allow people to pull your credit wisely.
Keep Your Credit Utilization Percentage Low
When you have credit cards and equity lines of credit, it’s easy to overspend. Some people feel that when they have plastic to spend that they can be freer than they can with cash.
However, if you have more than 30 percent of your credit spent, then you will get a knock on your credit report. If you have a credit card with a $1,000 limit, then you need to spend no more than $300 of that credit. The less you spend, the better.
Your income is a guideline that is used to see how much credit you can be awarded. However, a bank will only allow you a certain percentage of borrowing power based on that income. If you are beyond the 33 percent threshold, then you will be denied for loans. Additionally, your credit score will take a hit.
Don’t Go Over Your Debt to Ratio
Your income is a guideline that is used to see how much credit you can be awarded. However, a bank will only allow you a certain percentage of borrowing power based on that income. If you are beyond the 33 percent threshold, then you will be denied for loans. Additionally, your credit score will take a hit.
Diversify Your Credit
Never put all your “eggs” in one basket? You want to make sure that you have a nice mix on your report. You don’t want 12 credit cards and no auto loans as it looks odd to lenders. They see these credit cards as a potential for you to get into trouble. So it’s best to diversify your spending power to enhance your report.
Never Miss a Payment
Life happens, and there may be times when you are unable to pay a bill. Always call the lender or credit card services and make arrangements so that the late payment doesn’t show up on your credit report.
Most companies will work with you. If you get a ding for a late payment, it sends a big red flag to potential lenders that there is an issue making payments on time. Your payment history will make or break your credit score.
Finally, building a great credit score isn’t going to happen overnight. It takes time and patience to get your FICO where it needs to be. Be careful when you spend money where your credit is concerned, and always pay your bills on time.
Finally, building a great credit score isn’t going to happen overnight. It takes time and patience to get your FICO where it needs to be. Be careful when you spend money where your credit is concerned, and always pay your bills on time.
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