Steps You Can Take To Boost Your Borrowing Ability
Posted on: 16 October 2015
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Credit is necessary in life, and having good credit can make aspects of your life easier. When you have good credit, you can qualify for lower insurance rates and lower interest rates. You have control of your credit report and what it shows of your creditworthiness, so it is important to do all you can to keep it in good standing. Here are two tips to help you improve your credit and your ability to qualify for loans.
Balance Your Credit Products
Consider your credit report and what types of loans you have in your name. The variety of credit products you have makes up ten percent of your credit score calculation, and the more variety you have can help your credit score. For example, if you have several credit cards and no other credit, this can lower your credit score's potential, even if your payments are all on time. When you have a couple credit cards, an auto loan, and a mortgage, that are all paid on time, you can have a higher credit score.
There are different ways you can expand your credit portfolio to include other types of loans in your credit report to help increase your credit score. If you do not have an auto loan and you need to get a new vehicle for any reason, apply for an auto loan with which to buy your vehicle. If you have more than two credit cards, consider closing the extra accounts and paying off their balances. If you have a mortgage, but not a home equity loan, apply for a home equity loan. Then, you can use the new home equity loan to pay off your high interest rate credit cards to help your credit score. Make sure you make smart choices when opening new loans so you don't borrow more than what you can financially manage.
Correct Credit Mistakes Regularly
Periodically reviewing your credit report is something you should always keep in mind to do. Each of the three credit bureau companies give you a free copy of your credit report every year. So, you can look at your report every four months by using a different credit bureau company each time.
Make sure there are no errors on your report as you review it. Look at all the loans and credit cards that are listed on your report and make sure they are all yours. Also, check your personal information on the credit file, such as your address history, your age, and the name of your employer. If any of these are incorrect or showing information that is not yours, dispute it through the credit report from which you got the information.
Whenever you apply for credit, the information on your report, right or wrong, can be used to make a decision in granting credit to you. And in many states, potential employers can look at information on your credit report to help their decision whether to hire you or not. You don't want anything incorrect to be showing on your report.
If you do find any errors, disputing them is easy. If you are viewing your credit report online, dispute the error online also by following the instructions found on the website you are viewing your credit report information. If you are viewing an error on a paper credit report you received in the mail, follow the instructions included on the paper copy of your credit report. The credit bureau company is required to investigate the error with the information source or data provider, who has 30 to 45 days to respond back. If no response is received from the information source or data provider, the credit bureau will remove the information from your report.
Use these two tips to help improve your credit report and score. For more help boosting your borrowing ability, contact a financial adviser at a company like Financial Guidance Center.