Whether you want to purchase a center console boat, a pontoon boat, a deck boat, or even a yacht, you’re going to need a high credit score to finance a boat. You may be in the market for a small starter pre-owned $25,000 vessel to just get you out on the water, or you may desire a large, shiny, brand new $2 million yacht with multiple cabins, heads, a swim platform, and crew quarters. Regardless of what type of watercraft you’re going to buy, Trident Funding can help you get approved, but you will need a good credit score to qualify for the best boat loan rate. If you need help getting on the water, learn how we do boat loans at Trident Funding.
Tips to Raise Your Credit Score
You know you need to raise your credit score to qualify for a boat loan, but you’re not sure what to do. Let’s go over some of the most helpful tips to raise your credit score so you can apply for a boat loan. Keep in mind that not all of these will work for everyone, and it may take time to get your credit score to where it needs to be in order to get a boat loan, but if you follow the tips, and are patient, you will be out on the open water enjoying the fruits of your labor.
1. Bills, Bills, Bills
No, we’re not talking about the infamous song, we’re talking about your bills, the debt you’re responsible for paying. Make sure you pay all of your bills on time on or before their due date. Allow time for them to arrive if you’re mailing them or if there is an upcoming holiday. Debtors usually have a specific grace period before your payment is considered late and they tack a late fee onto what you owe. That grace period generally varies from a few days to 10 days, but the important thing to remember is that if your bill is paid more than 30 days late, it can be reported as late to all three credit bureaus.
This can have a tremendously negative affect on your credit score. If for whatever reason, you don’t think you will be able to make your payment on time, contact the creditor, and try to work something out before the bill is past due. It’s much easier to negotiate before you’re considered ‘behind’ on a payment.
2. Credit Cards
Credit cards can be a necessary evil. The average American has $5,221 in credit card debt. This varies by state, income, and education level, among other factors. But when it comes to qualifying for a boat loan, the lower your credit card debt, the better. The goal should be to pay off your credit cards entirely every month. This will boost your credit score and save you thousands of dollars in accumulating interest. Basically, if you can’t afford to pay off your credit card, don’t buy the item in the first place, unless of course it’s an emergency.
Your credit card utilization rate is also important. This is the percentage of credit that you use as compared to your total available credit. For example, if you spend $2,500 and your total available credit is $10,000, your credit utilization rate is 25%. Keeping this rate at 25% or less is ideal all the time, but especially when shopping for boat loans. Lenders want to see that you’re a responsible borrower, you can afford to take on more debt, and that you don’t max out your credit cards every month without paying them off.
If your credit card limits are low, you may want to ask for a credit increase. Don’t spend the extra money! Instead, let it help your credit utilization rate go down, because you are spending the same as before, but now have more available credit. For example, if your current credit limit is $3,000 and you typically spend $1,500, you’re using 50% of your credit. If you get a credit increase, and your new credit limit is $6,000, and you’re still only spending $1,500, you’re now only using a quarter of your available credit, which makes you a much more qualified borrower in the eyes of a marine lender.
One more tip when it comes to credit cards, is ask a responsible friend or family member with good credit, if you can be added as an authorized user on their account. It’s up to them if they want to give you access to an actual credit card, but if you’re an authorized user, you benefit every time they pay off their credit card. This is especially helpful if you don’t have a lot of credit history or are trying to rebuild your credit profile.
3. Dispute Inaccuracies on Your Credit Reports
Know your credit score and know exactly what is on your credit report. Check out reports from all of the three credit bureaus: Transunion, Equifax, and Experian. If that T-Mobile bill doesn’t look familiar, you never opened up a new credit card in 2019, or you know you made all of your car payments on time, but two are showing as late? Dispute them!
Each credit bureau has their own dispute methods, but once you check out their sites, they’re fairly self-explanatory. Usually, you file a dispute or objection, and include an explanation, and any evidence you have, and then the credit reporting agency has thirty days to respond to your dispute. They may get to extend this time period to 45 days if they need to review evidence you provide. If they don’t respond at all, the dispute is found in your favor, so it’s definitely worth doing because it only takes a few minutes to file each dispute.
4. Get Credit for Positive Lines of Credit
Paying things like your rent and utilities on time can help boost your credit score, and can help show a positive payment history. Recently, streaming services and other smaller monthly bills can also be added as positive trade lines. It’s best to check out a reputable rent-reporting service or an app that specializes in scanning your bank statements and automatically reporting your monthly bills that qualify. Check the reviews for these companies before signing up, so you know what to expect, and if they charge any fees.
More Tips to Raise Your Credit Score for a Better Boat Loan Rate
Here are some additional tips to help you raise your credit score if you’re shopping for the best boat loan rate:
- Review your credit reports regularly, your credit score isn’t stagnant. It’s constantly changing.
- Review collections accounts and work with collection agencies to pay them off
- Minimize the number of hard inquiries on your credit report: Basically, don’t apply for every offer of credit you receive.
- Consider a secured credit card if you want to build or rebuild credit. You back this card with a cash deposit upfront and use it like a credit card. Once you make a certain number of on-time payments, some companies will refund your initial cash deposit, and leave your credit limit the same, so it will turn from a secured credit card to a regular credit card.
- Have a mix of accounts on your credit history with on-time payments. Don’t have just loans or just credit cards, a variety can help improve your score, as long as they’re paid on time.
Once your credit score is in a better place, use a boat loan calculator to estimate your monthly rate.
How to Raise Your Credit Score: The Wrap Up
Now you know that the best credit scores often qualify for the best boat loans with the most competitive rates, the best terms, and the lowest fees. If you want to get out on the water and start enjoying your new boat life, then use our tips and tricks to raise your credit score so you can apply for a boat loan. In turn, a higher credit score will enhance your chances of credit approval for a boat loan and lower your monthly payments.