Your credit score is one of the most important factors lenders take into consideration before lending you money. Because of this, improving your credit score is one of the best ways to not only secure a loan but also to get a better interest rate on the loans you do secure.
More than 90% of top lenders use FICO credit scores to assess your financial health, which are determined by five factors: payment history, credit usage, age of credit accounts, credit mix, and new credit inquiries. Improving these factors is the key to improving your overall credit score, but there are two that stand out above all the others.
Pay your bills on time
Over a third of your credit score is determined by your payment history. Missed payments stay on your record for years. In other words, paying your debt on time is the best way to improve your credit score. Automatic payments and consolidating debt are two methods that can help you stay on top of payments.
Have debt responsibly
Nearly a third of your credit score is determined by credit utilization. Lenders want you to have debt — to show you are good at managing it — but not too much. A rule of thumb is to maintain your total outstanding debt balance at 30% or less of your total credit limit. If you’re unable to pay off enough debt to achieve this, raising your credit limit is another option.
At Ken Nelson CDJR, we’ll work with you to find the best deal on a car regardless of your credit score. Visit us in Dixon, Illinois, to get started!