Need A Consumer Loan? 4 Ways To Fix Problem Credit Before You Apply

Posted on: 28 June 2017

If you're going to be making a big-ticket purchase that will require a consumer loan, like the ones provided by MainSource Bank, you want to get the best rate possible. The last thing you want to do is pay hundreds – or thousands – more in interest for your purchase. Unfortunately, if your credit is in bad shape, that's exactly what can happen if you're not careful. Luckily, there are some things you can do to get your credit back in shape before you make your purchase. If you know you're going to be trying to take out a loan in the future, now's the time to get your credit fixed. Here are four steps you can take to fix problem credit.

Keep Your Credit Card Balances on the Low Side

If you're used to running high credit card balances each month, you could be jeopardizing your credit rating. Most consumer lenders look at your debt balance to determine worthiness for additional credit. If the balances on your credit cards are too high, you may not qualify for the consumer loan you need. Before you apply for that loan, take the time to pay down the balances on your credit cards. Once they're down, leave those balances on the low side; at least until you've taken out the loan you need.

Pay Off Small Credit Card Balances

If you've got multiple credit cards with low balances, go ahead and pay them off. Once you've paid them off, use only one of your credit cards for future purchases. It's better to have just one credit card with a higher balance, and several with no balance at all. The high balance on one will be offset by the zero-balances on the rest of your credit cards.

Know Which Debt to Get Off Your Report

If you've got paid-off debt on your credit report that you're trying to have removed, make sure you know which debt to remove, and which to keep. Good debt that's been paid off – debt that was never late – is better to keep on your report, especially if it's the oldest debt you have. Good debt that's been paid off increases the timeline of your credit history, which looks better to creditors. If you have bad debt that's been paid off – collections, late-pays – it's better to try and get that removed from your credit report.

Avoid Late Pays

If you've got a history of late-pays on your credit report, it could interfere with your ability to qualify for a consumer loan. Start making your payments on time, so you can get those late-pays off your credit report.

If you're going to be applying for a consumer loan, use the tips provided here to get your credit cleaned up before you apply. Clean credit will help you get a better rate for your loan.