For most of us, buying a used car means having to apply for a vehicle finance. The higher your credit score, the better your chances of a bank or financial institution granting you the loan. A higher score also means you’ll qualify for better interest rates, saving you a fair amount of money.
If your credit score is lower than the average range of around 600, you may want to take steps to improve it to reach 700 and above. Improving your score does take time, but don’t let this put you off – the sooner you start taking steps towards improving the faster they will increase.
To begin with, read our Guide to Credit Scores and Where to Check Your Credit Scores. This will help you understand which factors are negatively impacting your scores and what you need to do. These are some of the key factors to look into that may help you improve your credit score:
Pay your bills on time
Every monthly account or expense you have, such as rent, student loan, credit card, water and lights, phone, etc. should be paid by the due date. Setting up debit orders are a convenient way to ensure you don’t forget. A late payment affects your credit history as do missed payments.
Pay your credit cards off each month
Paying the full amount you spent in that month by the due date every month is key to building a good credit score. This shows responsible and reliable credit habits.
Reduce your debt
Pay off any past balances you owe – especially larger balances, which will make a more positive impact on your credit score than paying off smaller balances.
Keep your credit card spend low
Try to use as little as your available credit as possible. This indicates that you have sensible spending habits and good money management.
Keep new credit applications low
Don’t apply for too many new accounts over a short period of time.
Pay your bills every two weeks
If you can afford to, pay your accounts more than just once in a month. This will reduce your credit utilisation and improve your credit score.
These are a number of tips that could help you boost your credit score. Once you’re in the desired score range, follow and maintain two basic rules: Pay your bills in full and on time every month, and keep your credit card balances low. This should go a long way to getting closer to your goal of obtaining vehicle finance for your next quality used car.
Disclaimer: This information is for educational, or entertainment purposes only. It must not be construed as advice, legal, financial, or otherwise. We do not make any warranties about the completeness, reliability, and accuracy of this information. The views and opinions are those of the author and not necessarily those of Auto Pedigree.