Why should I worry about my credit score? This seems like a “no brainer,” but many people don’t realize how important their credit score is, and how it affects their ability to obtain a favorable mortgage loan. With a better credit score, you’ll have more loan options to choose from, and your interest rates can be lower. Here are four major tips for helping your credit score:
- Go to www.annualcreditreport.com to order your FREE copy of your credit report. This is the first place to start in repairing or increasing your credit score. Make sure there are no mistakes on your report! If there are any, get them corrected!
- Get all your credit accounts current ASAP. In order to stop adding negative information to your credit report, you must pay off overdue balances. If this isn’t possible right away, at least negotiate a plan to get these accounts current.
- Try to use LESS of your available credit. The larger gap between what you’ve spent/used and what is available to you, the better. It doesn’t look good to hold a balance of 2,000.00 on a credit card that you have a 3,000.00 limit on. Either pay it down OR see if you can get your credit limit increased; but only ask for the increase if you are ready to be disciplined enough to not use that extra credit!
- Don’t close any accounts. Sounds strange that it’s better to keep more accounts open, but as mentioned above, the more “available credit” you have the better your score is. Closing an old account can also negatively affect the length of your credit history. So keep the accounts open, but try and use very little credit, AND pay them off monthly. It’s good to keep a card active with small auto-pays for things such as gym memberships or monthly subscriptions.
By following these simple steps, you could be on your way to a better credit score and better mortgage! Good Luck!