When choosing a loan, one of the first things we check on is the interest rates. Apparently, the lowest interest rates and the best deals are only offered to those with good to excellent credit. If you have plans on obtaining a personal loan, car loan or mortgage, check your credit first to see if you’ll qualify for the best rates. If you have a low credit score, it’s a good idea to work on improving your credit first before applying for a loan. How can you build up your credit score? Here are some tips:

Remove negative information. Negative information can dramatically pull down your overall credit score. If those negative remarks are old and have already been settled, ask the credit bureau who issued your report if these remarks can be removed. Also, check for errors or incorrect charges in your report. If you found errors, call your creditor involved to clarify the issue and send a letter of dispute to your credit bureau.

Do not maximize your credit limit. See to it that you’re not using more than 50% of your credit limit on all your accounts. Experts recommend using only 30%-40% of your allotted credit to reduce the risk of accumulating debts and improve your credit score at the same time. Don’t close old accounts. Be careful about cancelling credit cards especially if you’ve had those cards for a long time. If those cards have high rates and charges, you don’t have to use them often. Use them once in awhile only for small purchases to keep them from automatically closing. After swiping the card, pay off your balance completely before your scheduled due date.

Submit payments on time. It’s important to submit your payments on time not only to your credit cards but to all your creditors. Pay close attention to your payment dates. As much as possible, try to submit your payments ahead of your due date to avoid delays or missed payments. Not only will this habit help build up your credit score, you can also save money by not paying the extra interest rate and late penalty charges.

Avoid submitting multiple applications to different lending companies. If you want to apply for a new credit card, choose carefully and submit your application to only one credit card company. Don’t try to apply for credit cards just to get the freebies they offer. Remember, too many inquiries on your credit report sends out a negative impression to other lenders and may pull down your credit score.

Call in advance if you’re going to be late. If you know that you can’t submit your payment on time for this month, call your lender or credit card company right away and explain your situation. If you do so, it is most likely that your creditor would extend your due date without reporting it as late payment. If you promised your creditor that you will be paying your balance by the next month, do your best to keep your promise.