You’re expecting a significant tax refund this year. It may be tempting to splurge it all. But if you’ve been thinking about buying a first home or financing a car, those extra funds can help improve your chances of getting a line of credit. Here are several savvy tips for using your refund to make it happen.
- Pay Down Balance
A line of credit is issued to an individual by a credit union or other lender that allows borrowing up to a designated amount. Because the line of credit must eventually be paid back, you can use your tax refund to pay down the balance. If you’re trying to secure a new line of credit, paying down existing credit card debt and other financial obligations may help boost your credit score. This can improve your chances of being approved for the line of credit.
- Apply For a Secured Card
Another way to up your chances of receiving or maintaining a line of credit is through responsible credit card management. A secured card is another way you can use your tax refund. You can use the funds to put a deposit on the card. When you make consistent payments each month, you’re establishing a good debt management record, which can increase your credit score over time. When you apply for a line of credit, lenders will take this into consideration during the approval decision process.
- Pay Off Existing Line
If you currently have a line of credit, your tax refund may be enough to pay down the entire balance. Credit unions and other lenders will typically be more inclined to approve you for another line in the future if you’ve demonstrated responsible financial behavior with a prior line of credit. Depending on your situation, you may even qualify for a higher amount should you need the funds for a home renovation or other financial priority.
With hundreds of millions of dollars in assets and over 60,000 members across Hawaii, Hawaiian Financial Federal Credit Union is one of the leading financial institutions in the state, with a reputation for combining personalized service with technologically advanced personal banking solutions. Learn more about our broad array of services online, follow us on Facebook, Twitter, and Instagram for news and updates, or call (808) 832-8700 on Oahu or toll-free at (800) 272-5255 with any questions.