Maybe you’re thinking about getting a new ride in the new year and you’re worried that your credit won’t allow you to get a car loan, or even a rate that you can afford. Not to worry! Here are the top financial resolutions to make for improving your credit:
1. Check your credit report.
This is one we all forget to do, or we put off doing because it seems like a pain. But if you’re serious about getting a car loan and you want to be disciplined about improving your credit, this is the number one thing you have to do. You can’t improve your credit score unless you know what things might be dragging it down.
The good thing s that the three major credit reporting agencies – TransUnion, Equifax, and Experian – are each required by law to provide you a copy of your credit report FREE once every 12 months.
How do you get it? Well, you can find information and answers to frequently asked questions on the Federal Trade Commission website. The FTC also warns against bogus websites that purport to give you free credit reports but instead lure you into signing up for additional, paid services. The official website to get your free reports, though, is annualcreditreport.com.
2. Tackle overdue accounts
Any credit account that is overdue and unpaid is a drag on your credit score, and must be paid off or at least made current. If you have more than one, which do you tackle first? We could write a whole post on that but essentially, you’re best off having fewer past due accounts, so try going after the ones you can pay off most quickly first; that is, the ones with the smallest balances.
This advice runs counter to what a lot of financial advisors might suggest, which is to pay off the account with the highest interest rate first. That is perfect advice for saving the most money but if you’re trying to improve your credit score quickly, it might not work as well.
3. Stay current and pay bills on time
This one sounds like common sense but we all get busy and sometimes it’s easy to forget to pay something in the hustle and bustle of daily life. The trick is to prioritize bill paying as one of your most important tasks.
Some people like to set aside a certain day or time to go over bills and make payments. Some like to pay bills as soon as they come in. Others use calendars to note due dates, and pay them when they’re due.
Technology can play an important role here as well. Setting reminders on your smartphone is a great way to keep from missing due dates. Many creditors offer the option of automatically drafting monthly payments from your bank account. Your bank might also offer automated bill paying services, too.
Use whatever combination of methods works for you, just remember to stay focused on the end goal – improving your credit so you can get the car loan you need for the car you deserve.