FREE Seven Tips To Maximize Your Credit PDF >> HERE <<
If you’re dreaming of owning your own home, but you know you first have to raise your credit score, I have seven steps to help you boost your score and get the keys to your dream home in no time.
#1: Pay your bills on time.
Did you know 35% of your credit score is based off of paying your bills on time? A 30-day late notice can drop your score anywhere between 60-110 points. So, making sure you pay your bills on time is going to positively impact your score.
#2: Keep your credit card balances low.
Did you know 30% of your score is based off of credit card capacity used? So, the higher your balance, the lower your score will go. Simply paying your bills on time and keeping your credit card balances low will go a long way in helping you raise your score as it makes up 65% of your total credit score.
#3: Get rid of debt faster.
This means try to pay off your debt sooner than the allotted time given. If they give you two years to pay off your car, pay it off sooner.
#4: Do not close your current account or open up a new one.
Closing a long term account will actually cause your score to go down initially.
#5: Order a free credit report from annualcreditreport.com and dispute any errors.
If you’re applying for a home loan, you want to know ahead of time what is on your credit report. Ordering a free credit report will allow you to see if there are any mistakes, so you can dispute it before it causes a problem on a loan application.
#6: Study and know your FICO score.
FICO is the most commonly used score lenders use when applying for a mortgage, so you want to see how it is factored. Remember, knowledge is power.
#7: Keep the debt to credit ratio less than 30%.
Keeping credit card balances below 30% of its capacity will help you keep your credit score high. For example, if you have a credit limit of $5,000, you only want to use 30% of the capacity of that card, meaning you only want to use $1,500 of credit and keep $3,500 unused. If you have one credit card with a $10,000 balance and another with a much lower balance, transfer some of the debt from one credit card to the other so that the capacity on both is as close to 30% as possible.
All of these combined are sure to help improve your credit score. DISCLAIMER: If you are looking to purchase a home, consult with a lender PRIOR to repairing credit or making credit repair decisions. As always, please don’t hesitate to reach out to me with any questions or for a list of lenders.