How to maintain or improve your credit score – Do’s and Don’ts
Renters who would like to become home buyers often find improving their credit scores a big challenge. No need to pay credit agencies big money …here are some common Do’s and Don’ts in Credit
1. Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score.
2. If you have missed payments, get current and stay current. The longer you pay your bills on time, the better your score.
3. If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This will not improve your score immediately, but if you can begin to manage your credit and pay on time, your score will get better over time.
4. Keep balances low (1-9%) on credit cards and other revolving credit. High outstanding debt can affect a score.
5. Pay off debt rather than move it around.
6. Re-establish your credit history if you have had problems.
7. Opening new accounts responsibly and paying them off on time will raise your score in the long term.
8. Note that it is OK to request and check your own credit file. This will not affect your score, as long as you order your credit file directly from the credit reporting agency or through an organization authorized to provide credit files to consumers (such as myFICO). 9. Apply for and open new credit accounts only as needed.
10. Have credit cards but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
1. Close unused credit cards as a short-term strategy to raise your score. NEVER close an open account unless it is costing you money!
2. Open a number of new credit cards that you do not need, just to increase your available credit. This approach could backfire and actually lower your score.
3. If you have been managing credit for a short time, do not open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you do not have a lot of other credit information. Also, rapid account build-up can look risky if you are a new credit user. Do your rate shopping for a given loan within a focused period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
Before you know it – you will be well on your way to owning your very own real estate.
To know what impacts your FICO score…check my article on “Factors that determine your FICO score”
Information courtesy Michael Lamborn – Guaranteed Rate Affinity
For more tips or a personal consultation for your Real Estate needs, call 484 947 3127.
Bela Vora, R3ALTOR
Coldwell Banker Realty