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How to improve my credit score
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How can I improve my credit score? I would like to look into buying a home and I want to make sure that my credit score is good enough to qualify me for a nice low rate. This is a very common question that is asked by many consumers. There are many ways, tips, tricks and programs available for improving your credit score. The first item that you need to consider is how is my credit and credit score currently. If your credit score is currently below 500 or in the low to mid 500s then you may want to consider a credit repair company, depending on how quickly you are looking to buy a home. You can also try to repair your credit on your own but let me forewarn you that it can be very difficult and very time consuming. Now if your credit is in the upper 500 range to low 600 range there are a number of different things that you can do to improve your credit on your own or you can still consider a credit repair company to help you get your score possibly into the upper 600s to low 700s. Finally if your credit score is in the high 600 range to anywhere in the 700 range, then your credit is actually pretty good and you may simply be able to improve your credit scores by educating yourself on the credit scoring process a little further and doing the tiny little things that can increase your score even higher. Read through the page in its entirety to find out more on credit scoring and how to increase your credit scores.Although excessive credit inquiries can impact your credit score, numerous inquiries with 1 industry(such as the mortgage or auto industry) in up to a 30 day period will only count as 1 inquiry. You are not punished for shopping within 1 industry to get the best deal.
Types of credit is another variable in determining your credit score. The varying agencies would love to see a mortgage, a car loan and 2-3 credit cards. If one of these is missing it isn't a bad thing. People can have scores in the 800's by not having a car loan or even a mortgage. Not having anything reporting to the various bureaus IS a bad thing.
If you have credit cards that are close to the limit or maxed out this will hurt your credit score. You can increase your credit score by lowering the balance to limit ratio to 50% or below%. For instance you would want a 10,000 limit card to carry a max balance of $5000. You can do this by either paying the balance down or requesting a credit line increase. If you gt a credit line increase you will have to use self control in order not to spend anymore on the credit card.
Payment history which carries 35% of your credit score is based on the number of times you have been on time with your various payments, how often you have been late and how late you have been. The more times you make your payments on time, the better. The later you are the worse your score can get. If you have some late payments that appeared in the past, that's ok. As the saying goes - "Time heals all wounds, including your credit." Better to carry a balance than to be late with a payment.
Pay your balances down below 50% of the high credit limit and you should see an increase in your credit score.
Even if you have no credit score, you may still qualify for a mortgage to purchase or refinance your home. In fact, having no FICO credit score at all will often be more favorable than having a very low credit score.
Do not pay off collection accounts unless the creditor agrees to delete the account. When you pay off the collection, the account shows paid but the activity is more recent and this actually hurts your score. If you must pay off a collection, do it at the closing of your mortgage transaction unless the creditor agrees in writing to remove the account once you arrange for payment.
One excellent step in improving your credit is understanding how your credit score is calculated. This is done using 5 main variables - payment history, outstanding credit balances, credit history, types of credit and credit inquiries. Understand each variable and how it affects your credit score and you will be better off.
This post has been filed under : fico, experian, equifax, transunion, credit scores