5 Steps to Boost Your Credit Score

There Are No Shortcuts to Improve Your Credit Score.

Step One to financial success is making a plan with goals and benchmarks. You’ll need to make sound financial decisions for several months to offset any previous damage to your credit record. It may take time, but it’s achievable. Here are four steps to improve your score and increase the chances you’ll qualify for a favorable mortgage loan

Boost Your Credit Score with a Plan

Making a plan is always the first step to success with any goal. Include basic steps that become habits, such as:

• Pay Bills on Time: Be sure all bills, including credit cards, loans, and utilities, are paid on time. Payment history is a significant factor in your credit score.
• Limit New Credit Inquiries: Avoid applying for new credit accounts or loans unless necessary.
• Monitor Your Progress: Regularly check your credit score to track improvements and adjust your plan. 

1. Check Your Credit Report

Verify that the items listed on your report—especially the negative ones—are correct. Correcting mistakes is an easy way to improve your score.

You can order free credit report copies at annualcreditreport.com or by going directly to the major credit bureaus: Experian, TransUnion, and Equifax.

2. Dispute Inaccuracies

Dispute any incorrect or outdated information on your credit report to have it removed, which can positively impact your score.

3. Pay Overdue Accounts

Past-due balances are very damaging to your score. Pay off the debt or negotiate a plan to get those accounts current. Once current, those accounts will stop adding negative information to your credit report and can generate positive credit score movement.

4. Use Less of Your Available Credit 

Keep your credit card balances well below the credit limit, ideally under 30%, to maintain a healthy credit utilization ratio.

Carrying a $2,000 balance on a Visa card with a $3,000 limit doesn’t help your credit profile. Pay down those balances to less than 50% of your available credit if possible. Another option is to ask for a higher limit. If Visa raises the limit on that card to $6,000, your balance will look better—as long as you resist the urge to add to it.

5. Don’t Close Accounts

Closing old accounts may seem counterintuitive, but closing a credit card account lowers your available credit. Keep that card active and set it up to autopay one or two small, recurring bills, such as your Netflix membership. Small things can make a big difference in boosting your credit score.

The Bottom Line

When you’re ready to start looking for a home, talk to a Texas REALTOR® with North Point Realty. Someone on our team can help you understand the many aspects of the home-buying process.

Thanks to Texas Association of REALTORS® for this article

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