8 Great Ways to Improve Your Credit Score

 In First-Time Home Buyers, Qualifying for a Mortgage

Knowing how to improve your credit score can save you tens of thousands of dollars over the life of a 30-year mortgage, so it makes sense to do everything you can to get the highest score.  But what score do you need, and how do you get that score?

With conventional loans (non-government loans), you need a credit score of 740 to get the lowest interest rate.  Here’s how you can get a 740 credit score.

How to raise your credit score – things you SHOULD do

  • Pay your bills on time. 
    • Every time you pay a bill 30 days late, it lowers your score. 
    • The more recent the late payment is, the more that late payment lowers your score.
  • If you missed a payment, get current on that account. 
    • If you are past due on an account, just making the late payment and not making the current month’s payment will continue to lower your score.
  • Keep balances low on your credit cards.
    • If your balance is more than 70% of your credit limit, it lowers your score the most.
    • If your balance is 50% – 70% of your credit limit, it lowers your score a bit less.
    • If your balance is 30% – 50% of your credit limit, it lowers your score even less.
    • If your balance is below 30% of your credit limit, it will improve your score.
  • If you don’t have any major credit cards (MasterCard, Visa, or Discover), you should open at least one.
    • Opening two major credit card accounts is even better.
    • If you are not sure how to do this, or think you won’t be approved, give us a call.  There are credit card accounts available that everyone can get approved for, and we can tell you how to get them.
  • Review your credit report with someone who will take the time to go over every line with you.
    • We will show you how to interpret everything on the report, how to identify errors, and how to fix those errors.
    • You should NEVER have to pay for this service, regardless of who you choose as your lender.

How to raise your credit score – things you should NOT do

  • Do not close old accounts
    • The longer your accounts are open, the higher your score will be.
  • Do not pay off old collection accounts if the collection company is not currently calling you or writing to you.
    • Paying off an old collection account will turn it into a new collection account, and a new “paid” collection lowers your score more than an old “unpaid” collection.
    • Unless you have thousands of dollars in unpaid collection accounts, we do not require you to pay them off before getting a mortgage.
  • NEVER pay anyone to “repair” your credit.
    • You can fix errors on your report by yourself – for free.  We will show you how and we will help you – for free.
    • There are no “secrets that the insiders don’t want you to know”.
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