Improving your credit score lowers the risk of lending you money. As a result, you become eligible for lower-APR loans and credit cards. Take these steps to get on the path to more attractive credit offers:
Pay off as much of your balance as possible each month. Most financial experts recommend using no more than 30% of your available credit, or about $2,000 if you have a credit card with a $6,000 limit.
Make timely payments. Doing so builds a solid credit history and allows you to avoid costly penalties. Sign up for automatic payments if you have trouble remembering to clear your balance on time.
Avoid applying for credit you don’t need. Too many inquiries can be a red flag for lenders, especially in a short time period.
Check your credit report once a year. You can obtain a free copy annually from each of the three credit bureaus (Equifax, TransUnion, and Experian). Dispute incorrect information that may be negatively affecting your FICO score.
If you are shopping for a loan or credit card and aren’t sure whether a particular offer makes sense for your financial situation, refer back to this guide to clearly assess its merits based on APR and other factors. Knowledge about financial concepts can eventually help you qualify for more favorable interest rates, lowering the expense of borrowing the money you need to meet your goals.