Tips to Raise Your Credit Score

Purchasing a home is the largest financial decision most people will ever make. You’re borrowing a lot of money, in the form of a mortgage, and will be making payments for the foreseeable future. As part of the lending process, financial institutions will use your credit score to determine if you’re a suitable borrower who can be expected to make their payments. For that reason, if you’re thinking about purchasing a home, you’ll want to give your credit score a careful look- and you might want to consider ways you can improve it.

While different loans and lenders will have different requirements for a credit score, you should always be aiming to improve your credit score as much as possible. Along with other factors, credit score will help you get approved for larger amounts- and potentially even more favorable rates or terms for your mortgage. Maximize your credit score and improve your chances with a lender with these helpful tips:

• The first step is to learn your credit score, which can be done for free from the three credit bureaus: Equifax, Experian, and TransUnion. Your free annual credit report will not only give you your 3-digit credit score, but also your credit report history, breaking down the factors that have contributed to your score. These include bill payment history, loans, current debt, bankruptcy, and lawsuit records.
• Check For Errors – It’s not uncommon for there to be an error on your report, such as out-of-date information. You can dispute errors with the credit unions.
• Pay Down Credit Card Debt- You need to use credit in order to build your credit score. Want to do that quickly and easily? Use your credit card smartly. You should have no more than 50% of your available credit in use. Making regular payments will increase your score.
• Negotiate Outstanding Debts – If you have outstanding debts, especially those which have gone to collections, you can negotiate with the creditor to have the debt removed from your credit report. Paying off old debts, even partially, can be enough to boost your score.
• Maintain Accounts Long Term – Using credit is one thing, but maintaining a long-term credit account also boost your score. About 15% of your score is entirely based on how long you’ve had your credit accounts.
• Bankruptcy – It gets a bad rap, but bankruptcy can be a powerful financial tool that can help clear up your credit situation. Bankruptcy resets your credit and allows you to make smarter decisions moving forward… but it should be considered a last resort, only when necessary.
  Credit issues do not have to last forever. By understanding what affects your credit, you can
  make real changes which will increase your score.

Buying a new home is an exciting time. It can also be stressful if you are unsure about your
credit or know that your credit is not as high as you’d like it to be. The good news is there are some surefire ways to increase your credit score. Make sure your report accurately reflects your use of credit and create a plan to improve your scores if necessary. Your future plans of home ownership depend on it!