Need Credit? What Do You Do?
There are many different things that you may require credit for. When you need credit, you will also need to know what to do. This is because how you handle the process can have a direct effect on things. For example, the lower the interest rate that you obtain, the less you will pay over the years in credit. A high interest rate on something big like a home loan could equal thousands of extra dollars that you did not have to pay. What should you do when you need credit? There are some steps that you can take in order to make sure you are approved for the credit and you get the best rates possible.
Check Your Credit Report
Before you even apply for the credit, you need to take a look at your credit score. You may be thinking that you have not made any late payments, so surely your score is just fine. However, your credit report and score is not something that you will just want to ignore. There may be things on your report that are erroneous. If you do not know that they are there, then you cannot get them corrected. You may have paid off accounts that are still open and still negatively affecting your score. If you do not take a look at your report, then you will not know to close those accounts. The things that could affect negatively on your score can include the following:
- Late payments on any bills that you owe
- Delinquent unpaid accounts
- High balances on your open accounts
- Too many open accounts
You have the right to view your credit report for all three reporting agencies: Equifax, TransUnion, and Experian. Before you make the decision to apply for credit, you need to look at your credit reports and make sure there are no surprises on them. In fact, it is a good idea to check your credit report at least once a year. If there is something wrong, then you need to act on it quickly to take care of the problem.
Clean Up Your Credit Score
Once you take a look at your credit reports, then you need to make a decision. If your credit score is high, then you have nothing to worry about. However, if your score is low, then you need to take action to clean up your score. It is important that you do things to improve your credit score before you apply for credit. Here are some things that you can do:
- Close any old accounts that are still open.
- Pay off small accounts and close them.
- Consolidate any accounts that you can and then close the excess accounts.
- Dispute any erroneous reports on your credit report.
If you have some time before you need to apply for credit, the more work you can do on your credit report, the better. If at all possible, make the time to do this before you apply for anything. This way, you can get a better interest rate. When you start considering how much money that you will be paying it interest, you will definitely want to get the lowest rate possible. Otherwise, you could end up paying hundreds or even thousands of dollars that you do not have to pay.
When you need credit, your immediate reaction may be to apply at a bunch of different places at once to see who will offer you the best deal. However, this could be a mistake. Each of those places will check your credit report. When someone accesses that report, it makes a small negative mark on your score. The more people access it, the worse your score will get. Instead, choose a couple of different options and apply with them first. If they do not work out, then consider moving on to someone else. Do not just apply at a dozen different places at once.
If you need credit, there are some things that you need to do before you apply. If you make the decision to check your credit report, improve your credit score and then apply carefully, you can make sure that you are able to get the credit that you need. In addition, these steps will make sure that you are able to get the best interest rates on the loans that you take out. The more you can do in advance, the better chance you will have at getting credit in the most favorable conditions.