Maximizing your chances at scoring a great loan, with low interest and friendly repayment terms, is like an athlete training for a major sporting event: it takes time, preparation and effort. Get your credit history in shape by doing the following:
– Do the obvious thing: Pay all your bills on time and pay no less than the minimum amount due. Hopefully, you already do this by nature, but if you have any recent missed payments, make sure to keep all your bills current for at least a year. For every bill, pay no less than the minimum amount due, and for credit card payments, you optimally want to pay at least a little more, even if it’s just $10 more. Whether or not that’s a little too difficult, you’ll want to do the following:
– Clear up your budget. Do whatever it takes to make sure you have enough money to take on a new set of loan payments: trim your budget, get a 2nd job, cut the subscriptions and stay at home as much as possible. Sure, you’re not going to take on that new loan for some time, but you can use the surplus to pay down credit cards, keep ahead of the bills or to just save money.
– Check your credit report and make sure to clear up any errors. You can get one free report per year from all three major bureaus through annualcreditreport.com. Make sure you recognize every account and every delinquency on these reports: if anything is reported as delinquent that you know is not the case, contact the bank or credit card company that reported the offending transaction and clear it up. Throw money at them if you must, but make sure bogus delinquencies come off your record.
– Take time and money to pay your credit card and loan balances down. If you’ve been treading water on a large credit card balance or two for a couple years, now would be a good time to hammer it down. If you have a chance to consolidate those bills to a credit card with a lower rate, do it, and focus on paying as much of it off as you can. As you pay those balances down, your minimum payment required will go down, and your credit score will go up. If you plan to consolidate balances with a new card, maybe one with a 0% introductory APR, try to do it sooner rather than later, because the last item is very important:
– If you’re planning on a loan for a major purchase, do not apply for any other financing beforehand. Any credit application you submit goes on your credit history and does negatively affect your credit score. If you want to get another credit card or a personal loan to consolidate debt, do it well in advance. Try to avoid applying for any other credit six months before you plan to apply for that big loan. Spend that time paying down your debts and keeping current, and future creditors will strongly approve when you reach out for an excellent loan.
If you want an excellent line of credit or a loan, the key is to work towards building strength in your credit history. Get your credit in shape and, when your big chance comes to get the best loan possible, your credit profile shall conquer every obstacle.