Best Ways to Increase Your Credit Score
It’s one of the key components to obtaining a mortgage. Your credit score can be the difference between being able to afford a home and letting the dream of home ownership slip away. According to the San Francisco Chronicle, your credit score influences the interest rate you’ll pay on your mortgage loan. The higher your credit score is, the lower your interest rate. So you want to make sure that your credit score is as high as you can get it. You may be asking yourself, how do I increase my credit score? Cliffco Mortgage Bankers has helped people get the financing they need to own a home. And we know how important it is to maintain a high credit rating. So we want to tell you about ways to increase your credit score.
Ask for and Pay Attention to Your Credit Score
The first thing you should do if you’re looking for ways to improve your credit score is to take a look at your credit reports. Financial institutions recognize scores from three major credit bureaus: Equinox, Experian, and TransUnion. These bureaus look at your financial information and develop a credit score based on that data. They will look at your bill payment history as well as the amount of debt you have.
According to Forbes, federal law states that you are entitled to look at your credit report once every 12 months, and you can raise your credit score by ensuring your report is accurate. The Federal Trade Commission has found that 5 percent of consumers have at least one error on their credit report, Forbes says. If you do find an error, you should report it to the credit bureau immediately.
Pay Your Bills and Use Your Credit Cards Sparingly
Another way to make certain that your credit score is sound is to simply pay your bills. “Payment history accounts for more than a third of the credit score, so keeping accounts up to date is vital in order to maintain the healthiest rating,” Bruce McClary, spokesman for the National Foundation for Credit Counseling, told NerdWallet. While keeping your payment schedule up to date won’t lower your credit report, it can stabilize it. NerdWallet says a single skipped payment can knock more than 100 points off a good credit score.
How often should I use my credit card?
You should also make sure not to overuse your credit card. Forbes advises you to only utilize your card less than 30 percent of the time. So if you have a $10,000 credit limit you should spend less than $3,000 a month. It’s even better for your score if you can get your credit utilization rate under 20 percent or even 10 percent. If you’re not sure if you can keep things under 30 percent, ask your lender to raise the credit limit on the card.
Also, don’t apply for too many credit cards. US News and World Report says that repeated requests for credit cards can negatively impact your credit scores. so don’t be tempted by that credit card promotion. Forbes suggests that you not open or close too many credit card accounts at the same time. That can be a red flag to lenders and may cause a drop in your credit score. You should hold onto your older credit cards because they demonstrate a longer credit history.
Cliffco Mortgage Bankers Will Let You Know What Loans You May Be Eligible For
Keeping on top of your finances and paying your bills on time is crucial to keeping a healthy credit score. You should sweat the details. If you feel your credit score might be healthy enough to get a home loan, or even if you’re unsure, talk to the experts at Cliffco Mortgage Bankers. We’ll assess your situation and let you know your options. Contact us today.