5 Tips to Improve Your Credit Score
Buying a home is a very important part of your life and can have many challenges. The first obstacle you will face, before even looking at homes, will be determining what you can afford and what a bank is willing to help you with. Banks will loan money to an individual, however, they charge interest, and the better your credit score the better that interest rate can be. The big question many people have once they check their credit is, “What can I do to improve my score?” Below are five tips on how you can help improve your credit score and get a lower interest rate to make your home buying dream come true!
Paying Down Credit Cards
The first thing that you want to do when improving your credit score is paying down your credit card debt. This has the biggest impact and is the fastest way to improve your score. Credit utilization, or the amount you can borrow versus the amount of debt you’re carrying, accounts for 30% of your credit score. You want to pay on the cards that have the highest balance first or the ones that are closest to reaching the limit given.
Paying Down Debt
After paying down that big credit card, you’ll want to pay off any outstanding debts and get current on all of the bills that you owe. Even paying a cell phone bill that is behind can affect your credit score. Take a few days to sit down and go through your bills. Start making payments on all of them to get caught up. Pay the bills that are late first for a quick credit boost!
Become an Authorized User
A trick that many people are unaware of, but has a great impact on your credit score is being added to a friend or relative’s account as an authorized user. Typically it helps more if the person who adds you has outstanding credit and pays their bills on time. When you get added to someone’s account their entire credit history shows up on your credit report immediately, which results in an increase in the average age of accounts you’ve managed. When doing this method just be careful to choose wisely, as stated their entire history shows on your credit report, that includes any negative history they may have or unpaid debts.
Check for Mistakes
Another helpful tip to improving your credit score is ensuring that it’s correct by fixing any errors that may have been put on your report. It’s not only a good idea to take a look at your credit report when you’re trying to improve your credit but also should be done occasionally to make sure the credit stays good and you aren’t penalized for unnecessary mistakes. If you do find any errors you can dispute these with the three major credit bureaus.
Remove Collection Agencies
Lastly, you want to be sure to remove any collection agencies that may show on your credit report. If your credit report shows any collections you can contact the creditor and see if you can do a pay-for-delete. Simply paying a collection amount does not increase your score unless it is completely removed from your credit report, which can be done when paying the collector and asking for it to be removed.
When you purchase a home you want to make sure everything goes as smoothly as possible since even when going perfectly every step can be more than stressful as is. Hopefully following these tips can get your credit score up and your interest rates lowered and get you that dream home you have always wanted!
