Could your credit use some improvement? Follow these long-term strategies now so you can secure loans quickly in the future. Whether you’ve just begun building your credit history or are trying to erase red flags from the past, you probably know this: Having good credit is incredibly important.
The better your credit, the easier it is to get loans that have low interest rates and offer instant purchasing power. Your cost for certain items is reduced with good credit, which is why it’s essential to start building it now.
What can you do to make yourself seem like a stable potential borrower in the eyes of lenders? Make these moves:
Increase your income
Yes, increasing your income is much easier said than done. It’s not impossible, however, and it has its benefits when it comes to credit.
If you find that your current income is getting you denied for credit, find ways to expand it, such as:
- Asking your boss for a raise at your current job
- Getting a second job to fill your free time
- Doing side gigs such as babysitting or lawn care
Every little bit of extra cash helps, so get creative when it comes to thinking of income-boosting opportunities. Just a small bump in what you bring home can reap considerable rewards in terms of credit approval.
Try to avoid any moves that reduce your income if you’re about to apply for a loan. If you know you are about to quit your job, for example, do it after the loan is approved. Leaving before will most likely result in rejection.
Clean up your credit
You don’t have to pay all of your outstanding debt at once. It should help to fix specific issues, though, that could be damaging your potential to receive loans.
Are you behind on any payments? Contact the creditor to work out a payment plan.
Do you have any negative information on your credit report? Get in touch with that creditor to see what it can be done to get it removed.
Since you may have more than one issue to fix, it’s best to prioritize them before getting to work. Don’t panic, either. As long as you start fixing each problem, you’ll be better off than where you were before.
Build your credit history
You may have unblemished credit because you have no history at all. This is probably true if you’re a student or have just arrived in the country.
How can you fix this problem? By applying for credit cards or loans and making sure you pay them on time.
The more history you build, the more information lenders will have on you as a borrower, and the less risk they’ll assume when granting you credit.
Pay down any existing debt
Certain loans you currently have can impact your ability to acquire others in the future. Have a strategy in place to pay down old debt, even if it means making small payments.
As you eliminate old debt, you’ll free up more monthly income that can be used towards newer loans. In doing so, you will be seen as a better potential borrower.