"Raise Your Credit Score Easily with These Tips

Allow Mortgage Lenders to Access Your Credit Report

In the mortgage world, having no credit is just as bad as having poor credit. Neither situation will position you well for getting approved on a home loan. Sometimes, while you can still get approved, it’s at a rate that can cost you thousands of more dollars. When you are considering buying a home, it is a good idea to take a look at your credit and talk to a trusted mortgage lender for specific advice for your unique situation to help you be poised for purchase. In fact, talking to a mortgage lender early may help you get financed quicker than if you don’t.

How to Raise Your Credit Score

While we recommend speaking to a lender, these tips will help you get moving the right direction:

Payment History. Payment history information makes up the majority of your score – about 35%. This shows whether or not you make payments on time, and how often you do so.

Stay on top of timely payments by setting up auto-drafts for at least the minimum payment. Most creditors allow this feature, and if they don’t, you can set up your bank to automatically remit payment on your behalf. If neither of those solutions works for you, set alarm reminders or use a calendar to keep track of your due dates and give yourself enough time to get the payment in.

Balances. Amounts owed make up about 30% of your credit score. Balances for all your credit lines should be amounts that are realistically able to be paid. Balances shouldn’t be greater than a third of your total open credit. For example, if you have $10,000 in credit, you should only be using $3,000 of it.

Length of Time. Credit bureaus also look at how long credit lines have been open. Use your lines of credit, even if just to make a few minimum payments to show it as active. For this reason, it’s important to not close accounts unless you talk to your lender. Closing an account with a zero balance can be detrimental. Likewise, don’t open new accounts or lines of credit unless advised.

Accuracy. Order a copy of your credit report from all three bureaus- Equifax, TransUnion, and Experian, and check them for inaccuracies. Use their policies for disputing anything that isn’t correct. Talk to your lender before paying anything off, as that can make it active again.

You may be able to negotiate terms and settle a debt for less than what you owe if you are able to make a significant one-time payment. Ask about these options if you contact a creditor.  

If you are considering homeownership and aren’t sure about your credit, a call to a local lender is a wise first step. We can tell you where you stand and offer advice on what to do to raise your credit score so you are in a better position to obtain the mortgage (and home) of your dreams. Contact us today to learn more.