Things to look for when getting car insurance

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Having a good credit score can go a long way in securing a loan at a good rate. It can come in handy if you want to get a credit card approved or maybe refinance your mortgage or even get an auto loan. If you are looking for ways to improve your credit score as soon as possible, some things can be done to help speed up the process.

How can you raise your credit score quickly?

Many people ask “How long will it take to increase the credit score?” The answer to that question is that the credit score will not increase overnight. It will take some time, but you will see a difference in a couple of months. There are some things that can be done to speed up the process of improving your credit score. These include:

Paying Debt strategically

If you have multiple credit cards, it works in your favor if you pay off the payments on the card with a higher balance. It helps you to bump up your score by using what we call the credit utilization ratio. So, for example, if Card 1 has a credit limit of $5000 and balance of $2000 whereas Card 2 has a credit limit of $8000 and a balance of $1000 on it, it means that your credit utilization ratio for card 1 is 0.4 (2000/5000) while credit ratio on card 2 is 0.125 (1000/8000). Thus, paying the balance on card 1 which has a higher credit ratio will help increase your credit score.

Finding out when your credit card issuer reports payment history

You can contact your credit card issuer to find out when they report the balance to the credit bureaus. It is usually the closing date which is the last date of the billing cycle on the account. However, it is important to understand that is not the same as the due date on the statement. By using the Credit utilization ratio, which is the amount of credit you have utilized versus the credit amount available, you can use it to your benefit. By keeping the ratio under 15%, your credit score can get a boost.

It can be tricky to ensure that your payment is made before the reporting date. So even if you pay your balance every month but your payment is made after the reporting date, the balance that will be reported would be high, which can in turn negatively impact your credit score. This is because the credit utilization ratio seems inflated. Thus, ensuring that your bills are paid off before the closing date can have a significant impact on the credit score.

Making payments regularly

Many times we rack up our purchases because the need arises suddenly. For example, your laptop broke down and needed to be replaced, and at the same time, you had to buy a new dryer because the old one was not working. If you put big-ticket items on the card, it can throw off your utilization ratio. In such situations, it is advisable to make payments about two weeks before the closing date and then make another payment installment right before the closing date. It is best not to use credit cards for big amounts that you plan on carrying forward over a longer period of time. The compound interest would add to the debt really fast.

Increasing Your Credit Limits

If you increase your credit limit on one or more of your credit cards, it helps to bring down your credit utilization ratio. One important aspect to keep in mind when doing so is that this trick helps to bring down the ratio only if you do not utilize the extra available credit. If you have a trend of downward credit score, or you have missed payments with an issuer, do not try this method because the issuer may see this as a sign that you are going through a financial crisis.  That may negatively impact your credit.

Mixing It Up

Having different kinds of loans can sometimes help. By getting and maintaining credit cards with low utilization ratios and getting a car loan with a very low-interest rate, you can raise your credit score a nudge by ensuring you are paying the newly acquired car loan on time. It can be helpful to understand that the categories that make up credit score include payment history, amounts owed, credit mix, credit history, and new credit cards. This strategy is a good long-term approach.

The main thing to remember when trying to improve your credit score is that it is helpful to keep the credit card balances low and paying the bills fully on time. If you are in the market, looking for a pre-approved loan, contact Any Credit Auto Loans and our team will be more than happy to assist you with the best possible loan options.

For a no hassle car loan in Canada, contact Any Credit Auto Loans.

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