When you are first starting to learn about the importance of credit score, you might not know where to start. First and foremost, learning what a bad credit score is and why it ‘s deemed bad is important to understand why you want to achieve a good credit score. Therefore, it’s equally important to learn how big purchases (like buying a car) can be affected by your current score, or how they can potentially hurt your score in the future. Once you get a handle on the bad side, then there are tips on how to improve your credit score quickly and as painless as possible. Keep reading ahead for my tips, but through researching the answers to these questions I came upon a great collection of apps that can help you.
Learn what a bad credit score is and why
Firstly, you might want to know, what’s a bad credit score? According to FICO, (the company that developed the most widely used credit scoring system), a credit score of 300-550 is a bad credit score. Sadly, a bad credit score can affect you in many ways, therefore, it’s important to learn so that you stay motivated to keep your credit score high flying.
A bad credit score can make it difficult to get a loan, or if you are given a loan, the interest rates could be awfully high. Additionally, a bad credit score can hinder you from gaining residence or even a job. So, how do you get a bad score? For the most part, your score goes down when you have delinquent payments, have an account that has been sent to a collection company, foreclosure, or bankruptcy. All in all, if you have outstanding debt, your credit score could be in trouble.
Learn About Big Purchases and Your Credit Score
Your credit score can also affect you when you are looking to make a big purchase, like, a car for example. Although most car dealerships won’t let you walk away without a car with a bad credit score (they are looking to make money), the possibility of them sticking you with a high car payment is undeniable. Therefore, if you have a bad credit score when buying a car, you can absolutely expect a high-interest rate, but, you can shop around until you find a dealership that will give you the lowest of the high rates.
Conversely, If you do have bad credit and need a car immediately, there is an upside. If you pay your car payments on time every month and adhere to the contract you signed at the dealership, you will start to see your credit score climb. All in all, it may be a bit pricey to buy something expensive with a not-so-perfect score, but you can come out on top if you are diligent about making your payments on time and let that one high-interest rate bring you out of the bad and into the good.
Learn how to improve your credit score quickly
So, if you don’t want to buy a car at a high-interest rate to help improve your credit, that’s understandable, there are ways you can learn how to clean up your credit report yourself.
For example, the first thing you should do is get your free credit score report every year. This way, you can see if there are any errors on it that you can dispute. Another way to improve credit score immediately is to make small but frequent payments to your credit card over the month.
This will boost your credit score quickly as well as getting higher credit limits on your cards. Lastly and most importantly, set timers on your phone put it in big bold red letters on your calendar, but always, I mean always, pay your bills on time and you will see your credit score increase.
Credit scores don’t have to be a difficult part of your life. Once you understand what a bad score can do, and how to improve your score, it should be fairly easy to achieve with discipline as well as help from tips like the ones I have shared with you, apps that can help you stay organized and up to date, and online resources to gather more information. So, whether you’re just wrapping your head around credit scores or looking for ways to improve, there’s a ton of information and helpful tools out there to help you achieve financial success.
This is a collaborative post.