Your credit score is the single most important factor in your loan approval. You can have excellent income, low debt and a significant down payment but if your credit is poor you may have trouble getting approved. Even if you can find a loan product it will often be at a higher rate than you anticipated. Trying to figure out how your credit score is determined will leave you confused and sometimes frustrated. Paying all your bills on time is not enough. You also need to carry low balances on your accounts. There must also be the right mix of established accounts coupled with new credit. Once you know what your score is you can work on improving it. Here are a few ways to give your score a bump regardless of where it is now.
Remove erroneous items.When is the last time you looked at your credit report? If you are like most people it has been several months and in some cases never. Fixed your score starts with knowing what it is. There are many reputable sources available to get your score. You can start by going directly to the three main reporting bureaus Transunion, Equifax and Experian. Once you obtain a copy take a look at all of the liabilities listed. If you have a popular last name you may be surprised to find items that are not yours. You may also find accounts that were paid and closed but still on the report. These accounts may be pulling your score down. Contact your credit provider and work on getting these removed as soon as possible.
Transfer high balance accounts.As we mentioned one of the items that brings scores down is the amount of available balance per account. If you are maxed out or nearly maxed out your scores will drop. Take a look at your accounts and consider transferring to where you may have additional credit limits. You can also consider making large payments to reduce the amount as well. Don’t just accept your accounts the way they are. Be open to playing around to find the best balance and rate for you.
Schedule monthly payments. Most average credit scores sprinkle in a few missed payments. This may not be for lack of funds but for lack of organization. With everything going on it is easy to miss a payment here and there but there is no excuse for it. Set up a schedule so you know when all accounts need to be paid. Even better have these automatically debited from your account at the same time every month. All it takes is a few late payments to have a negative impact on your score. Whatever system you choose do something so you never miss a payment again.
If you are thinking about buying a home in the next six months you should consider getting monthly credit score alerts. These will inform you of any changes to your score and if any new accounts have been added. It is much more difficult to get items removed than to stay on top of existing ones. Your credit score is too important not to stay on top of.