Credit: How To Get Approved
You go to apply for a loan and you get rejected. How does this happen? It’s because you either had no credit or a low credit score. In this post I’ll attempt to share with you a few suggestions on improving your credit score.
- Get your credit report. This should be step one. Start early and be proactive. Months before you plan to apply for credit, get your credit report and see what is hurting your score.
- Report errors. Look it over and report inaccuracies. It’s bad enough your score is suffering because of your past mistakes, but it should not suffer because of the mistakes of others. You can submit a dispute letter along with proof to the credit unions to get it fixed.
- Outstanding debts. You should make every effort to reduce and eliminate outstanding debts. Which ones should you pay off first? If you have 7 items on your report, perhaps you should pay off the smallest one(s) first. If you have a really old debt (4-5 years old), it might be beneficial to not pay it off, as its impact on your score has diminished.
- Credit utilization rate. Don’t use too much of your available credit. If you have two credit cards, each with a $5,000 limit, you should only be using less than $2,500 on them (25% / $2,500 out of $10,000 total).
- Different types of credit. You might still be denied if you have a good credit score. Having no credit is almost as bad as having a bad score. But credit isn’t all about just using credit cards. There are two types of credit, revolving credit (like a credit card, once you pay it off you get loaned more money) and installment credit (like a loan that you pay off and then you’re done with it). Have a good mix of these types of credit histories in your report.
