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Your credit scores, along with your overall income and debt, are a big factor in determining whether you’ll qualify for a loan and what your loan terms will be. You want to do what you can to improve and maintain your credit score before you apply for a loan.

– Pay all of your bills on time for at least year. Many companies let you set up automatic payments, which is a great way to make sure you never forget to mail a check!

Check your credit reports for errors – if you find any get them fixed. Mistakes happen, and you could be paying for someone else’s poor financial management. Each of the three major credit reporting companies has to give you a free credit report every year if you ask for it. They have set up a central website to handle the requests – visit www.annualcreditreport.com and check on your credit info every year.

Credit cards and how you manage them have a huge affect on your credit score. Transferring credit card debt from one card to another could lower your score. Don’t open new credit card accounts because having too much available credit can lower your score. If you have extra accounts that you don’t use consider closing some of them.

Manage your accounts. Your score will usually be higher if you have a couple different types of credit, but make sure none of them are charged to the limit. If you owe a lot of money on many different accounts it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

Also, the longer you have had your accounts open, the better. If there is an account you are ready to pay off consider keeping it open and using it once in a while rather than closing it when you make your final payment.

Last, but not least… Avoid finance companies – even if you pay the loan on time, the interest is high and it can be considered a sign of poor credit management.