How to Raise Your Credit Score: Top 5 Tips
In this article, the experts from the Indy Auto Man Indianapolis auto dealership gathered the most effective strategies to increase your FICO score before purchasing a car so you can get approved for a loan and secure better financial terms.
Improve Your Credit Fast in Indiana
A good credit score is crucial when it comes to buying a car. It affects your ability to get approved for a car loan, and the interest rates the lenders will offer. These simple steps will help you raise your credit score.
Make payments on time.
Timely payment is the most important thing you can do to raise your scores. FICO and VantageScore, the two main credit scoring models, consider payment history the most influential factor in determining a credit score. To lenders, your ability to make credit card payments indicates that you are capable of repaying the loan.
It's not just your credit card bills that affect your score. You need to pay all bills on time, from utilities to medicine.
Set up automatic payments if you forget about deadlines.
If you doubt you can pay your bills in full, set up to pay the minimum. Another simple option is to set payment reminders. Many banks allow you to schedule reminders through their websites, including sending them by mail or as phone notifications. Use Google or Outlook or even a physical calendar.
Don't open too many credits at the same time.
FICO and VantageScore track the number of credit inquiries (applications for new financial products or requests to increase the credit limit, as well the number of new accounts opened). Apply only for what you need not to spoil your ranking. If you aren't sure you qualify, you can submit an online prequalification form. Such queries do not affect the credit score.
Dispute any errors in your credit report.
It's wise to review your reports from the major credit bureaus: Equifax, Experian, and TransUnion. You can actively monitor your credit and receive three free credit reports a year (one from each bureau) at Annualcreditreport.com. 26% of Federal Trade Commission study participants found at least one error in their reports that could make them appear unreliable to lenders.
Keep old accounts open.
The length of your credit history is one of the key factors determining your FICO score. The longer your credit history, the better it is for your score. Lenders want you to have a long track of responsible credit use before they are willing to give you credit. If you close an old account, you are erasing the part of your credit history that could hurt your FICO score. Therefore, it is vital to keep old accounts open for as long as possible.
The key is to use the account periodically to show it is still active: make small purchases every few months and then pay them off immediately. This will show the credit bureaus that the account is still in use and that you are a responsible borrower.
What Is Considered a Good Credit Score?
The FICO score is the most commonly used system to reflect your credit score. It varies from 300 to 850 points. The higher your credit score, the better your chances of getting approved for a loan on better terms.
| Rating | Score Range |
|---|---|
| Very bad | from 300 to 579 |
| Normal | from 580 to 669 |
| Good | from 670 to 739 |
| Very good | from 740 to 799 |
| Excellent | from 800 to 850 |
Raising credit scores takes effort and time. However, the payoff is worth it in the end. By taking steps to raise your score, you can get better interest rates and increase your chances of being approved for a car loan. Start working on this now, and you'll be in a much better position to get the best auto loan terms in Indiana when the time comes.
If you have any doubts, contact the Indy Auto Man finance department for a free consultation. We work with 24 banks and financial organizations to guarantee the best terms regardless of your credit score.
