How To Build Good Credit Before a Big Purchase

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How To Build Good Credit Before a Big Purchase 300x121 How To Build Good Credit Before a Big PurchaseMaking a large purchase such as a new house or car will require good credit. Many mortgage and auto loan lenders will deny financing to individuals who do not have a certain credit score and positive history. Five tips will help to improve credit in the months before making a large purchase.


5. Maintain Bank Accounts


Opening and maintaining a checking and savings account does not directly improve credit. Bank accounts do show creditors that an individual is stable. Creditors will want to see both a checking and savings account. Some money should be in the savings account. Bank accounts can affect credit if they are not maintained properly. Overdrafts and negative bank balances can be recorded on a credit report. More than a few days with a negative balance will reflect poorly on individual credit. The accounts should always be in good standing and should always contain money.


4. Never Miss A Payment


A missed credit card or utility payment is one of the fastest ways to ruin otherwise good credit. A single missed payment could reduce a good credit score by as much as 100 points. All payments should be made on time and in the amount requested. Using options such as direct debt will help to prevent late or missed payments because of problems with the mail or other factors.


3. Use A Reputable Credit Repair Service


Credit reporting agencies regularly make mistakes on credit reports. Lenders make mistakes as well. These errors appear on credit reports without any notification. This can quietly ruin the chances that an individual will qualify for a large purchase. A reputable credit repair service like can specifically address these types of problems. Removing errors and other issues from a credit report will increase scores.


2. Use Credit Cards


One of the best ways to build good credit is to use credit. Credit cards provide a fast and simple way to do this. Charging small amounts every month that are less than half of the available limit is a good start. Good credit is established by paying back this amount over time. The entire balance should not be paid down the next month. A small amount of the balance should be left in the account to be paid down the following month. This shows financial responsibility as well as the ability to repay loans.


1. Pay Existing Debts With A Loan


A person who has existing debt that is quickly accruing will find it very difficult to improve a credit score. It is sometimes beneficial to take out a personal car loan in order to pay off overdue debt immediately. This is really only effective for smaller amounts. Paying off old debts immediately with a small loan will prevent future damage to a credit score. It will also simplify payments since only the personal loan needs to be repaid instead of multiple creditors.

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