Improve Your Credit

Credit Tips

Arizona Car Sales in Mesa Arizona presents a guide to improving or establishing your credit!

Credit Scores, otherwise known as FICO scores, range from the high 300’s to a perfect 850. Given the challenging economy, housing and employment market of the past couple of years, many people’s credit has been adversely affected, some people dropping from a 700+ score to one in the 400’s. Here at Arizona Car Sales in Mesa Arizona, we get asked what the best ways to improve your credit are, so we decided to publish the best ways we have seen for people to establish or re-establish credit. The goal of having a credit score in the 700 range, which means you will get the best interest rates and terms available, means that most people have to get to work and get their credit score in shape! After all, your credit score determines what interest rate you’ll pay on your auto loan, credit card balances, most kinds of insurance, and your home mortgage. The higher your score, the lower the interest rates you’ll be offered so try these suggestions!

Managing Credit

To improve your credit score:

  • Pay all your bills on time
  • Only apply for the credit that you need
  • Don’t use too much of the credit that is available to you
  • Order your credit report every year and dispute any errors you find
You can get a free copy of your credit report every 12 months if you go to www.annualcreditreport.com. The purpose of monitoring your credit reports is to look for any inaccurate information and then work with the credit bureaus to get it removed. There may be inaccurate, negative items on your credit file. One negative item may effect your score as much as 50-100 points! You can also subscribe to a credit monitoring service like Equifax that will update you real time on inquiries and account activity. For more information, just click the FINANCING tab on our home page!

If your FICO score is too low, you probably have trouble getting a credit card. There is a type of card, called a secured credit card that, for example, if you put $500 in your secured account, you get a card with up to a $500 limit. Using the secured credit card will help your credit rating. If you can’t get a regular credit card, apply for the secured version. With a good payment history, most banks will return your deposit in 12-18 months, making it unsecured! Another great way to establish/re-establish credit is with a secured loan from your bank or credit union working the same way as a secured credit card by using a savings account as collateral. The best part is that the loan reports as a secured loan, no different than an auto or home loan! Just click our FINANCING tab on our home page for Bad Credit Visa/Mastercard lenders and a list of Secured Credit Card Issuers!

If you are married with a low FICO score and your spouse has good credit, read on. You can leverage their credit with the piggyback method. It lets you build credit in your own name, and at a much faster pace than if you had to build it all by yourself. Have your spouse add you as an “authorized user” to their account. You may find their entire account history gets posted to your credit report. This will raise your FICO score 50-100 points if the accounts have been open awhile!

This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.

Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as “not mine.” The older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute. Some consumers also have had luck disputing old items with a lender that has merged with another company, which can leave lender records a real mess.

Your credit scores are calculated based on the information in your credit reports, so certain errors there can really cost you. But not everything that’s reported in your files matters to your scores.

Here’s the stuff that’s usually worth the effort of correcting with the bureaus:

  • Late payments, charge-offs, collections or other negative items that aren’t yours.
  • Credit limits reported as lower than they actually are.
  • Accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full.
  • Accounts that are still listed as unpaid that were included in a bankruptcy.
  • Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your reports.

Money and Credit Resources:

Credit Report resources:

You’ll get the fastest improvement in your scores if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans). The BEST way to improve your credit is with an automobile loan. A secured, installment loan with regular monthly payments will do more for your credit than a credit card, rent to own or banking account and the best way to get an automobile loan is using Arizona Car Sales!!