Even if you have a good or very good credit score, there’s still some room for improvement. By moving your score into the excellent range, you’ll find it much easier to qualify for every type of loan – such as personal loans and business loans – with favorable terms.

This leads to an important question: what’s the best way to get an excellent credit score before applying for a loan?

Although it’ll take some time for your strategy to produce results, here are some of the steps you can take to reach your goal:

Review Your Credit Report for Errors

Incorrect information on credit reports remains a major problem (and probably always will). You can assume that your credit report is accurate – especially if you have a high credit score – but there’s no way of knowing for sure until you review it from start to finish.

If you find an error, contact the credit bureau to file a dispute. Clearing this up can go a long way in boosting your score.

Always Pay on Time

If you’re already in the habit of doing so, stick with it. However, if you sometimes miss a payment or pay late, immediately change your ways.

Payment history has a big impact on your credit score, so even one late payment can drag it down.

Pay Down Your Debt

Credit utilization is a primary factor in calculating your credit score. This measures the balances you owe on credit cards against the limits.

For example, if you have a credit card with a $10k limit and $9k balance, your credit utilization is high. By paying this down, you’re taking a step in the right direction.

Tip: you can make immediate progress by simply paying more than the minimum each month.

Don’t Take on New Debt

If you set the goal of increasing your credit score before applying for a loan, you shouldn’t take on new debt at this time.

For instance, if you want to apply for a personal loan in six months, don’t run up a large balance on your credit card. Doing so will dig you a financial hole, all while working against your master plan of boosting your score.

Take Your Time

In a perfect world, you’d take a few key steps and experience an immediate credit score increase. Unfortunately, this isn’t something you should expect.

It can take several months, or longer, to see a positive impact after taking one or more of these steps. The key to success is sticking with your plan, as to give it time to take hold.

Final Thoughts

By following these tips, you better your chance of getting an excellent credit score before applying for a loan. Conversely, when the time comes, it’s easier to qualify for a loan with competitive terms and conditions.