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5 Ways to Improve Your Credit Score

A good credit score can save you thousands of dollars when getting a car loan, so it really pays to make sure you're doing everything possible to keep your credit score high.

For those with credit scores of 750 or higher, you're probably qualifying for the best loan rates already. But for anyone with a credit score below that, here are some simple things you can do to improve your score.

First, it's important to know exactly what your current credit score is. I recommend you use to check yours.

1. Pay Your Bills on Time

If you're over 30 days late on your credit card payments or any other type of loan, this is going to really hurt your credit score. Make sure you pay ALL your bills on time. Any delinquency will stay on your credit report - sometimes for up to 7 years.

The good news: The more recent transactions are counted more heavily towards your credit score, so if you can pay your bills on time for at least 6 months, you're on your way to increasing your score.

2. Keep Credit Card Balances Low

To optimize your credit score, you will want to keep your credit card balances under 40% of your maximum limit. If your card has a limit of $1,000, you'll want to keep your balance under $400 each month.

3. Don't Open Any New Credit Card Accounts

The older your credit history, the better. Any time you open a new credit account, your credit score can potentially go down. This is because lenders see this as a "need for money" and they will think you're less likely to be able to pay them back.

The only exception is when you don't have any credit history. You will want to get a credit card to start building up your credit.

4. Add an Installment Loan to the Mix

There are two types of credit: Revolving (such as credit cards), and Installment (auto loans, mortgages, and personal loans). Lenders like seeing installment loans as part of your credit history and one way of improving your score is to take out a small personal loan from a bank or credit union and pay it back over time.

Just make sure the loan will be reported to all three major credit bureaus.

5. Check Your Credit Report for Mistakes

You'd be surprised how often mistakes can pop up in your credit report. It's important to check your credit report once a year. The good news: It's free.

Just go to to get a free copy of your credit report from all 3 major credit reporting agencies.

My Recommendation for Car Shoppers

TrueCar No-Haggle and Edmunds Price Promise are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

Gregg Fidan

About: Gregg Fidan

Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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