How to Improve Your Credit Score for Lower Rates and Better Loan Offers

You are in a better position to bag the best deals on loans, mortgage and various credit offers at a lower rate, if you have a good credit score. The ideal credit score is above 720, anything above 800 is excellent, while the score below 620 is considered a huge risk to the lender who may not approve a loan or offer it with very high interest rate.

Take heart though; you are not alone. there are many people who have less than flattering credit score, which puts them at a disadvantage to get low interest on loans and credit. Even if your credit is okay, you may want to better it so that you can get loans and credit at much lower rates.

Here are tips on how you can improve your credit scores

1. Use your credit card to affordable limits only – First and foremost, you need to have a credit card. Once you have it, you can build credit. However it is a two pronged sword, if you use it excessively and are not able to pay back even the minimum due on time, your credit score can take a beating. So, make sure that you use your credit card to limits that you can afford. If you are not able to get a regular credit card, then get a secured credit card in which the issuing bank gives you a credit line that is equivalent to the deposit that you have made. Also the credit card that you use should report to all the three major credit bureaus.

2. Pay your credit cards on time – Aim to pay the entire balance before the due date. Credit cards work on revolving credit and their major means of revenue is the finance charge. If you are not able to pay back the money on time before the due date, then there are late fees and over-the-limit fees that accumulate in addition to the finance charges. So, it is better to pay the balance before the due date or at least pay the minimum due so that there are no negative markings on your credit file. Getting your balances below 30 percent of the credit limit on each card can really be of help, but if you get your balances below 10 percent, you are good.

3. Look out for errors on the credit report and bill statement – We tend to easily overlook the fact that there can be charges worth disputing on the credit card bill and discrepancies in the credit report. You may find late payments, charge-offs, finance charges, on your billing statement. You may see negative items that are older than seven years that should be taken off your credit report, still lying there. At times, some accounts may be listed as ‘unpaid’. These can be billing errors or even errors on the part of the credit scoring software. So looking at every charge and entry carefully and dispute it, else these can bring down your credit score.

4. Close down accounts that you are not using – One of the best ways to improve your credit score is to close down the card accounts that you are not using. Having too many credit cards means having too much unused credit. However, do not close your old cards; they can improve the credit score. Use them for petty expenses like a movie ticket, dinner etc, so that your credit report shows that your credit history is good and you are using it in affordable limits.