If you haven’t already please review the previous blog “What YOU Should Know about YOUR Credit” to better understand how credit scoring works and then this blog for some helpful hints to enhance your score, but be patient, credit scoring is a fickle and arguably flawed system, there is no magic button to be pressed, just sound habits, good practices and time.
- Correct Mistakes or Errors
Reviewing your credit report regularly and correcting mistakes can raise your score, which improves your credit history.
- Pay ALL bills on time
Just one 30-day late payment can lower your credit score dramatically. Make sure you always pay on time, even if you’re only paying the minimum.
- Reduce Balances on Revolving Debts
Pay down all credit card balances, so the amount you owe is below 30% of the card’s credit limit. This is called your “balance to limit ratio” and mentioned in the previous blog “What YOU Should Know about YOUR Credit”.
For example, if your limit is $1,000, you want to owe no more than $300 at any given point.
- Can’t Pay it Down? Move It!
One card may be maxed out, but if others have small balances, move some of the big balance to the other cards, so all three have less than a 30% utilization ratio.
- Can’t Move it? Increase It!
Call the creditor and ask for a credit line increase.
An $850 balance on a card with a $1,000 limit is an 85% utilization ratio. Increase the limit to $3,000 and that utilization ratio goes below 30%.
- Use that Card that you haven’t for a while
This sends a report to the credit bureaus, increasing your available credit and helping the utilization ratio. And since the length of your credit history contributes to 15% of your score, using an old card might help there too.
- Focus on Revolving vs. Installment Accounts
Revolving accounts, such as credit cards, let you carry a balance and pay a monthly minimum amount. Installment accounts require you to pay a fixed amount each month, like an auto loan. If you have money available, use it to pay down your credit card balances, not to pay off your auto loan sooner.
- Limit New Inquires/Accounts
This lowers your score temporarily and makes a new creditor, like a mortgage lender, less eager to open another account for you.
- DON’T close any accounts
This lowers the amount of credit available to you and therefore lowers your credit score.
- DON’T Do it Alone
Keep in mind that all credit profiles are unique, I encourage you to call a licensed mortgage loan officer if you have questions pertaining to your specific credit profile.
When purchasing real estate choosing the right professionals to assist you in this journey will be the key to YOUR success, I have been blessed in my career to surround myself with whom I consider the very best at their profession and welcome you to contact me and my team to help Guide You Home.
Content submitted by;
Sr. Mortgage Advisor, NMLS #397424
Province Mortgage Associates, Inc., NMLS #2861
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