Your credit score is the determining factor for things like getting a mortgage, applying for a credit card, trying to rent an apartment, and will determine the interest rate on any debt you owe. It is so important to continually check and monitor your credit score to make sure it is as high as it can be.
Each and every person is entitled to view their credit report once a year, for FREE. Visit annualcreditreport.com once a year to not only view, but print and keep your credit report. The website gives a report from each of Equifax, Experian, and TransUnion. This is a great way to look at all of your credit history and be able to make changes if needed. Always check for errors, as it does happen quite frequently. You wouldn’t want any surprises when it comes time to get pre-approved for a mortgage!
The first and easiest way to improve your credit score is to always pay your bills on time. This shows a history of being reliable, and a lender will use that to assess the likelihood of you paying a loan back on time. Payment history is the number one area that a lender will look at when determining if you are a good candidate for a loan.
The second largest factor in determining your credit score is the ratio of the credit you have versus the amount you use. A safe way to look at this is to never max out your credit card. Even if you pay it off every month, it can still have a negative impact on your credit score. Also pay attention to the number of credit cards you have, and use.
For example, if you have two cards, each with a $1,000 limit, and you’ve charged $500 on one card and left the other card untouched, your ratio would be 25 percent. Closing the unused card would immediately bump your usage up to 50 percent and likely knock down your score.
The main point is to try to maintain a balance between the amount of credit you have versus the amount of credit you use. These are just two basic tips to help you start to improve your credit score, as it will determine how likely you are to receive credit from a lender.
Are you one of the many that want to buy a home this year and want to improve your credit score?
Contact me, Barb Bottitta, for any and all of your Lehigh Valley area questions, as well as real estate needs, as I am always happy to help in any way that I can! You can also connect with me on my Facebook Page for events and happenings in the Lehigh Valley area, as well as home ownership tips, real estate market updates, and so much more!
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