8 Tips to Boost Your Credit Score
Credit scores can have a big impact on the type of mortgage and financing you receive when buying a home.
In general, having a higher score will help you secure lower rates and qualify for different programs. Follow the tips below to see a boost in your credit score:
1. Check your credit report for any errors or negative marks
When you receive a copy of your credit report, make sure you review it and verify that all the information is correct. The last thing you want is to have a negative mark on your report that’s inaccurate. Because each credit bureau reports differently, it’s important to review each report since one of the bureaus may have reported an error that the other two did not.
In addition, make sure that old mistakes are removed from your report. There are limits on how long some negative marks can remain on your credit report. Therefore, make sure to submit a dispute with a credit reporting agency about removing a negative mark if enough time has passed.
2. Focus on where you can improve
Figure out what your areas for improvement are. What’s currently bringing your score down? Late payments? Lack of credit age? High credit usage? Identifying any problem areas on your report will consequently help you work out a solution.
3. Prevent and rectify late payments
Always make your payments on time. It’s helpful to set up reminders via email, text message, or app to stay on top of your bills and recurring payments. Additionally, you should pay off any outstanding late payments. Some companies will forgive a one-time late payment if you have a history of making payments on time. If you happen to miss a payment though, don’t worry too much because it won’t appear on your report unless you’re at least a month past the due date.
4. Make sure your credit age is high enough
Credit age is another factor that determines your score. The longer your credit history is, the more reliable you seem to potential lenders. It’s advisable to build a credit age of five years to positively impact your score.
5. Resolve any issues with collection agencies
If you have any outstanding debts, collection agencies may contact you for repayment. Any account that’s sent to collections will appear on your credit report for multiple years and can hurt your score. Make sure that your debts are repaid and dispute any inaccurate marks on your report.
6. Keep credit apps to a minimum
Limit any credit card or credit applications when you’re looking to buy a home. This will prevent any unnecessary dips in your credit from creditors checking your report.
7. Pay attention to your credit utilization ratio
Your ratio of available credit to the credit you’re using is an important component of your credit score. It’s advisable to keep your ratio below 30 percent to avoid negatively impacting your score. Try to keep your credit usage as low as possible and consider making extra payments each month to give your score a boost.
8. Keep unused credit card accounts open if they don’t charge annual fees
The more available credit you have, the lower your credit utilization ratio will be. Even if you don’t use one of your credit cards, it benefits you to keep the account open so that you have more available credit. However, you should weigh the cost of keeping the card if it requires an annual fee.