There are no shortcuts to improve your credit score. But don’t despair! Follow these 6 tips and you can improve your credit score.
1. Make a Plan
Step one to financial success is making a plan with goals and benchmarks.
You’ll need to make sound financial decisions for at least several months to offset previous damage you’ve done to your credit record. But that doesn’t mean it can’t be done. Here are five more steps to improve your score and increase the chances you’ll qualify for a favorable mortgage loan.
That’s always the first step to success with any goal.
2. Check Your Credit Report
Verify that the items listed on your report—especially the negative ones—are correct. If there are mistakes, correcting them is an easy way to help your score. You can order free copies of your credit report at annualcreditreport.com. Or contact the credit bureaus directly (click the links) TransUnion, Equifax, and Experian – they are required to give you a free copy of your report once a year. All you have to do is ask. Nicely.
3. Pay Overdue Accounts
Past-due balances are very damaging to your score. Pay off the debt or at least negotiate a plan to get those accounts current. Once current, those accounts will stop adding negative information to your credit report and can generate a positive credit-score movement.
4. Use Less of Your Available Credit
Carrying a $2,000 balance on a Visa card with a $3,000 limit isn’t going to help your credit profile. Try to pay down those balances, if possible, to less than 50% of your available credit. Another option is to ask for a higher limit. If Visa raises the limit on that card to $6,000, your balance looks better—as long as you resist the urge to add to the balance on that card.
5. Don’t Close Accounts
This one is 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.
6. Pay Every Bill on Time
Even one late payment can hurt your score. Do everything you can to always pay your bills on time.
If one month you’re not able to pay everything on time, be smart about which bills you pay late. Your mortgage lender or credit card provider will definitely report a late payment to the credit bureaus, but utilities and cell providers may not.
When you’re ready to start looking for a home, talk to a North Point Realtor®
Thanks to the Texas Association of Realtors for this information.