6 Tips for Improving your Credit Score
You’ve probably been drawn to those ads claiming that they can boost your credit score 100 points in 30 days – who wouldn’t be?
It’s a tantalizing offer to those of us who have a lower credit score than we would like, but good credit is not something that happens over night or without effort.
The best advice we can give you is to manage your credit responsibly over time.
Here are some trustworthy tips to achieving that:
1. Check your credit report
This first one is a no-brainer. Under federal law (THANKS, OBAMA) you are entitled to a free copy of your credit report once every twelve months from each of the big three reporting agencies: Transunion, Equifax, and Experian.
We recommend checking one report every four months – you can do that easily at www.annualcreditreport.com.
Dispute any errors you find, such as closed accounts reported as open, errors made to your identity information, accounts with an incorrect credit limit, etc. You can do this by calling, emailing, snail mailing, or using the credit reporting agencies’ website functions.
2. Keep your credit card balance to 30% or lower of your limit
High outstanding debt can negatively impact your credit score.
Keep the amount of your credit card balance that you use relative to your credit limit low. For example, if your credit limit was $100, you should be regularly using and paying off $33 of that.
This will improve your score because it shows that you are not maxed out and that you manage debt well.
3. Leave old debt on your report
Don’t close old accounts where you’ve have a solid repayment record.
This may seem counter-intuitive, and a lot of people anxious to get in control of their credit close many accounts. However, long-standing accounts with a good repayment record are like A’s on a report card – you want those to be on your high school transcript when applying to colleges!
Old accounts show that you have a history of being able to handle credit responsibly.
4. If you’re shopping for new credit, do it within a short timespan
When you apply for a mortgage, a car loan, or even a new credit card, you invite a company to do a “hard pull” on your credit. This negatively affects your credit score, because the credit reporting agencies assume that you are about to ask for more credit.
So, when comparing rates, try to do it within 30-day window so your credit is only impacted once.
5. Pay bills on time
Find a way that works for you to pay your bills on time, whether its automatic withdrawals, a mobile app, or a calendar hanging on your fridge with dates circled.
If you have missed payments, get current and stay current. Prioritize this tip.
6. Take Homebuyer Education & attend financial coaching
At Homebuyer Education, you’ll do a deep dive into budgeting and credit.
After the course, you’ll be eligible for free, one-on-one financial coaching. TAKE ADVANTAGE OF IT.
Our financial coach will help you create a budget that reaches whatever financial goal you have set, and will give you customized tips and advice for improving your credit.
Sign up for Homebuyer Education Class today.