REBUILDING YOUR CREDIT ISN'T AS HARD AS MANY PEOPLE THINK
In fact, the process is relatively straightforward, and it doesn't take long to get back into the green. A good credit score is crucial when it comes to major purchasing decisions such as your home or vehicle.
So, exactly what are the steps needed to get your credit back into good standing?
STEP #1: Understanding Your Credit Score
The first step is to figure out the current standing of your credit score, so you can plan accordingly. We recommend obtaining a credit report from Equifax® to help identify areas of improvement, or lingering credit issues that shouldn't be there.
Remember that credit scores are calculated using an algorithm that takes into account the following:
- Payment history
- Credit utilization
- How long accounts have been active
- Number of open accounts
STEP #2: Pay Your Bills On Time
This is the step most people know, but they may not realize just how much of an impact it has on their overall credit score.
Paying bills on time, even the minimum amount, can prevent a red flag against your credit score, and keep track of their bill dates, and that can be a real problem when it comes to paying bills on time.
Set up reminders on your calendar, have your smartphone alert you with notifications, or consider setting up preauthorized payments in order to make sure you never miss a payment. This creates a positive payment pattern that reflects well on you.
STEP #3: Use a Car Loan To Improve Your Credit
The Best of Both Worlds
It may seem odd, but financing a car can go a long way towards rebuilding your credit. After all, it's a significant purchase that requires you to be on time with your payments - which is precisely the point. By taking on a car loan, you can buy a car and improve your credit - killing two birds with one stone.
However, you might be asking yourself: "How can I get a car loan if my credit is already poor? There are solutions, and DriveAxis provides them.
You can purchase a beautiful, reliable vehicle that best suits your personal taste and day-to-day routine, while using it as a springboard to build your credit score back up.
We give people the chance to get into a new car, while rebuilding their credit score at the same time. It's a win/win scenario that benefits everyone.
Credit reports benefit from having a mix of different credit on file, and auto loans are one such example.
Different types of credit create a story about what kind of borrower you are, and if you can swing that into a positive, you're on the right track.
Another benefit of taking out a car loan is that it opens the door to other types of loans in the future.
When lenders see that you're responsible when it comes to big expenses like a new car, they'll feel more confident in lending you money for things like personal loans, mortgages, or business startup loans.
And, finally, there's no substitute for learning how to manage your money properly. Having a car loan will help instill that discipline from day one.
This kind of high-level responsibility will aid you in the future when it's time to purchase that house, or open your new business.