There are several things to do when your credit improves. Bad credit makes it harder to get loans, jobs, and even affordable insurance rates. Fortunately, poor credit doesn't have to be a permanent mark. If you pay your bills on time each month, pay off your debt, and limit your number of credit inquiries, you can slowly improve your score.
Here are seven things to do when your credit improves.
1. Buy a House
One of the most popular things to do when your credit improves — buy a house. Homeownership is a goal for most people; but unfortunately, a low credit score stops many mortgage loan approvals. Nowadays, you need at least a 680 credit score to qualify for a conventional mortgage loan — although some lenders recommend scores in the 700s.
2. Buy a Car
You can finance a car with bad credit, but you’ll pay an extremely high interest rate. Now that you have good credit, you might qualify for an auto loan with a reasonable rate, resulting in low monthly payments. Improving your credit score also provides an opportunity to refinance at a lower rate and save money.
3. Re-evaluate Your Credit Cards
A bad credit score also triggers higher credit card rates — as high as 20%. Your risk level drops once you improve your score and you become eligible for lower interest rates. Look at all your credit cards and compare the interest rates. Next, call your credit card companies and ask the company to reduce your rate. If they refuse, start shopping for a new credit card.
4. Seek a New Job
Would you like to work for the government or get a job in the finance industry? Unfortunately, a low credit score can prevent many of these job opportunities, especially since many employers pull reports when hiring new people. However, if your credit has improved since the last time you applied for jobs, now’s your opportunity to work in a desired field.
5. Shop for New Auto Insurance
Although auto insurance has nothing to do with credit, some insurance carriers charge higher rates to customers with bad credit. If your credit score increases, notify your auto insurance carrier and ask for a better rate. You may not be eligible for a lower premium until it’s time to renew your auto insurance policy.
6. Don’t Cosign
With your newly improved credit score, friends and family may ask you to cosign a loan on their behalf. As much as you would like to help, don't. You worked hard to improve your credit score; therefore, never put your score at risk. No matter what anyone tells you, you’re responsible for any loan that you cosign. If the primary account holder doesn’t pay his or her bill, your score will suffer.
7. Protect Your Good Score
Credit scores fluctuate; and if you return to bad habits, your good score could drop. To protect your score, continue paying your bills on time and keep low debts.
The fact that you’ve improved your credit score is commendable. And with a good score, many options are available to you. From buying a house to getting a better job, a higher score is the number one way to demonstrate your credit worthiness.
What else can you do with a high credit score?