Do you know where your credit score is currently? If not, then it’s time that you look into it and make sure you are managing it properly. Your credit score plays a very important role in your life.
The higher your score, the more money you will save over time due to a lower interest rate on purchases. You should be making every effort to properly manage credit so you can get the loans you need and save money in the process.
In this article I’ll be talking about 5 tips to boost your credit score over time. Using these strategies can really give your score the boost that it needs. Remember that credit takes time to build, and like most of us have experienced, one small mess up can take away everything that you’ve built.
5 Tips to Boost Your Credit Score
Before you can boost your score, you have to find out a few things. You have to see where your credit score is currently and what is on your credit report. You can discover this information in a few different ways.
When you approach a mortgage loan officer like myself, we pull your complete report including scores. This is a big part of the mortgage process. You should not fear getting your credit pulled at this time because any and every lender will have to pull it to get your most current score and report.
This is why we tell people to get your credit checked and pre-qualified before you start home shopping. You don’t want to wait to check it until after you’ve found your dream home because if something on it needs to be removed or fixed, you want to have time to do so.
So your first step is to get a report and see where you currently stand. Once you find that out, you can begin using the strategies below to boost your score.
- Pay Down Credit Card Balances – Having racked up too much debt in the form of credit cards can really hurt your score. Considering that credit utilization makes up 30% of your credit score, using too much of your available credit will cause your score to take a beating.
- You want to keep your credit utilization to 30% or lower. If you are using more than 60% of your credit, paying that down to lower levels can increase you score fairly quickly. Just don’t pay it down to zero as that can hurt your score also. They want to see that the credit is being used but also managed properly.
- Pay Bills On Time – One late payment can drop your score by 60+ points overnight. So you want to make sure that you are making payments on time. One great way to make sure to not forget is to set your bills to auto-debit. By making payments come out automatically, it removes the possibility for you to forget and miss the due date.
- Request a Limit Increase – This is also a top way to give your score a little boost. Keep in mind though, this is NOT for everyone. You should consult with a professional prior to doing so. By working with a mortgage loan officer, we have the ability to run you through a credit simulator to see what type of impact doing this will have on your score. Since credit utilization is 30% of your score, increasing that amount of your available credit can drop your utilization. After looking at one of our client’s reports, we noticed she paid bills on time and managed credit decently well. She held 2 credit cards with a total of $3,000 credit limit. She had used $2,000 of it, which gave her a total utilization of 66%. We requested a limit increase on one of her cards. After getting approved for the increase of $1500, her new total credit limit was $4,500 bringing her utilization down to 44%. This alone increased her score by 38 points in less than 2 weeks.
- Correct Errors on Report – One of the first things you should look into when looking over your report is that there are NO inaccuracies. It is highly possible for things to be on your credit report that aren’t from you and shouldn’t be there in the first place. One way to get them removed is to simply dispute them. Disputes can be made online or with a typed or written letter to the credit bureaus disputing the error on your report. They then have 30 days to investigate and either remove the error or leave it there.
- Get Secured Credit Card – It is a great tool to help you establish and build credit history. It’s basically a line of credit with collateral. It works kind of like this. You deposit money into an account and the bank or credit company will give you a credit line equal to that amount of money. Use the credit wisely while making on-time payments as such will be reported to the credit bureaus and help with your credit score.
The above strategies are great starting points for trying to boost your credit score. They aren’t guaranteed to work for everyone but have proven to be successful in many cases.
It’s best to speak with a credit or mortgage professional to see if these strategies would be effective for you. As a loan officer, I have the ability to get you a FREE credit report and run you through a credit simulator to determine which of these things can impact your score the most.
If you aren’t there yet, we map out a plan and work together towards improving your credit so we can get you qualified.
If you are interested, contact me so that we can go over your credit profile and determine which of these things would impact your score the most, giving you a nice boost. You may only be a few points away from qualifying for a mortgage and I’d love to help.
