When applying for a private student loan — or, while we’re at it, a mortgage, auto loan, or credit card — a major factor which could impact your approval decision is your credit score. Improving your credit score can affect not only whether you’re approved for a loan but the interest you’re charged as well; it might also be taken into account by insurance companies, landlords, cell phone companies, or potential employers, so it’s important to keep this number as high as possible for a better chance at lower rates or even a job offer. And we at Climb want to help future borrowers feel confident when filling out our student loan applications. Below, we have a few ways you can maintain a strong credit score in order to increase your chances of approval or a lower interest rate!
Check your credit report
The first step toward improving or maintaining your credit score is, of course, figuring out what it is. In doing so, you will not only have a better idea of where you stand, but you can also check for any inaccuracies or unknown factors which may be erroneously impacting your credit. One place to view the details used to calculate your score is AnnualCreditReport.com.
Plus, if you’re interested in checking out what the score itself is, many banks and credit card companies offer this information as a service. You can call, check your statement, or see if the score is viewable through their online banking.
Pay bills on time
Then, once you get familiar with your current credit situation, you’ll want to get in some habits that will help keep your score as high as possible. Paying bills on time is one of the most important habits you can practice, and luckily there are ways to help make it easier for you. You can connect your bank account to ACH and schedule automatic payments, so you don’t have to worry about procrastinating or missing a due date because you forgot about it. Or, if you don’t want to connect your bank information, you can simply schedule reminders for yourself to pop up every time you need to pay a bill.
Reduce your debt
Reducing your debt is another way to secure a good credit standing. Yes, we know, this is much easier said than done. But even small increments help, and the payoff is decidedly not small. The internet is filled with stories of people who paid off thousands of dollars in debt and advice for how to do so yourself. Figure out what’s most effective for you and keep working at it.
Stay below your credit limit
Showing you’re not spending beyond your means each month can also give your credit a boost. So, make sure you stay below the limit on your credit cards. Don’t whip out a card for every purchase (or maintain a budget to keep all spending to a minimum). If you really need to, you can also increase the limit on your credit card — as long as you don’t subsequently increase your spending in proportion to it.
Raising a credit score is going to require lots of time and patience. But following the above guidelines will set you on the right track to making even small improvements. And then, sticking to these habits will help you maintain that good credit standing!