Improve your credit score with these tips.
Credit Scores affect people in so many ways – it impacts either positively or negatively their approval for car loans, credit cards and mortgages, AND at what interest rate/terms they’ll get on that loan. If you are considering buying a home, you know this. Most credit scores fall in the 300-900 range, with higher numbers being the better credit score. Over the course of time, poor credit scores can cost thousands of dollars in fees and interest — but it doesn’t have to be that way. Check out the following tips to help improve your credit score.
Know your score
Regularly check your credit score and make sure it’s accurate. Any discrepancies on your report should be disputed with the credit bureau and reporting agency. You don’t want to let errors remain on your credit report!
Don’t be late
Late payments are one of the biggest contributing factors to your credit score. Set up a payment reminder system or use an auto-pay option to make sure your bills get paid on time. Always pay something and always be on time!
That’s easier said than done! You need to borrow money in order to establish a history of credit, but you don’t want to borrow too much, either. Most experts say your monthly debt should consume around 30-35 percent of your monthly income. If you’re over that mark, make a plan to reduce your current debt and avoid opening new credit card accounts until your debt scenario is in better shape. Avoid closing accounts with a balance as well, as that can negatively impact your score.
Owing a collection agency hurts your score. Paid collection accounts are far better than unpaid, so don’t ignore that piece of your credit history and get it paid off as soon as possible. But don’t expect that part of your credit history to go away once it is paid in full. Collection accounts stay on your credit history for 7 years, so the best way to fix this issue is to not ever have it! If you still have the collection report on your history after 7 years, get it removed.
In financial trouble
Seek out help! Be proactive and reach out to your lenders for assistance in payment options or see a financial counselor to help you get back on track.
And what you really need to remember is to be patient in this process. It seems that bringing down a score is easy, but bringing it back up it a lot of hard work. Plan to be diligent with your payments and then wait. It’s going to take time to improve your score.
The Minnesota Association of REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.