Your credit score is the first thing that will influence your loans.
Most banks and credit unions use the FICO score to know the credit rating of a person that is applying for a loan. Those that have less than a 600 credit rating are deemed to have bad credit. If you have bad credit, then you would generally be charged a higher interest rate than those with good credit. If you have a credit rating above 720, you have a good credit rating.
Those that have a good credit rating are able to get loans ranging witching 6-8% interest rates. But if you have a bad credit rating, then you may be charged a higher interest rate of 12-17%.
Rates differ from state to state. For example, if you have a score between 760 and 850, then you would be charged $772 for a 36-month car loan on $25,000. But if you have a rating below 580, you would be charged $884. This means that you would be paying $112 more for the same loan. Over a 36-month period, you would have paid $4032 more if you have poor credit.
FICO scores are comprised of all the loans, payments, and credit card payments that you have made. If you have made payments on time and in full, then you would have an excellent credit score.
This score is dynamic and even if you have a bad credit score, you can make your payments and improve your credit rating. This in turn will make loans cheaper for you in the future, especially if you use an app to apply for bad credit installment loans.
These are some of the tips that you can use to improve your credit scoring:
Always pay your bills on time. If you lag behind on your bills, this can adversely affect your credit scores. If for any reason, you have missed your payments, make them now and stay current.
Ensure that it gets listed on your credit report. Most adverse information normally stays on your credit report for 7 years. If you are facing difficulties trying to make ends meet, then it’s important that you see the creditors and manage your credit, your score will improve over time.
Ideally, you shouldn’t have any balances on your credit card. Don’t revolve your credit on the various credit cards. High outstanding debts on credit cards can adversely affect your credit scores.
Even if you have the same outstanding debt on your credit card but fewer open accounts, your credit score will increase. If you don’t need credit cards, then don’t get new credit cards. Opening new accounts won’t increase your available credit; rather this plan can easily backfire on you.
Apply and operate the accounts that you need. Opening too many accounts and having a number of credit cards serves no purpose. It really doesn’t raise the credit score.
Those with no credit cards tend to be at a higher risk since lenders think that they can’t manage their finances well.
If you have bad credit and open new accounts and make installment payments in time, it will raise your credit score in the long term.…