TIPS TO RAISE YOUR CREDIT SCORE

It's not as hard as you think to raise credit score

If you’re not quite sure what your credit score means, or if you have no idea how to improve it, you’re not alone. Many people don’t realize that credit scores are assigned to measure credit risk; in other words, it’s there to show lenders how likely you are to repay the money you owe them.

It’s a well-known fact that lenders give people with higher credit scores lower interest rates on mortgages. If your credit score is below 620, you’re going to have a tough time getting credit cards with reasonable rates—and getting a mortgage with a reasonable rate is even more difficult.

There are millions of people who have credit scores below 620, though. The good news? It’s not impossible to raise.

The higher your credit score, the better deals you’ll get. It’s that simple. So how do you figure out what to do next?

Get a Copy of Your Credit Report

Before you do anything, you need to get a copy of your credit report so you know your starting point. Read it carefully to make sure that there’s no inaccurate information on it, especially if a creditor is reporting that you made late payments or that you failed to pay something you owed. You can contact the credit bureau (Experian, TransUnion or Equifax) to have erroneous information removed; you’ll just need to prove that the information is incorrect.

issuer reports your outstanding balance once a month to the credit bureausImproving Your Credit Score

Lenders evaluate your credit based on a number of factors, and one of the most important is how good you are at paying your bills on time. Your payment history carries a lot of weight—especially your recent payment history—and being even 30 days late can deal a severe blow to your credit score.

Start to pay down your debt, as well. Credit card companies report outstanding balances each month, and carrying a low balance shows that you’re responsible (and not maxing out all of your cards) with your money.

Don’t close your old accounts, even if you’re not using them. Closing out your old accounts makes your credit look younger, and it changes the amount of total credit available to you. Lenders want to see that plenty of people are asking you to take their money, so it’s best to leave your old accounts open.

Keep your hard credit inquiries to a minimum. A hard credit inquiry is what lenders do when they’re evaluating your creditworthiness, and a series of applications for credit within a short period of time signals that you’re desperate for credit. Lenders will wonder why you need credit so badly—and they will be less likely to extend it. If possible, avoid all credit applications for a year before applying for a major loan.

Do what you can to avoid bankruptcy. It can lower your credit score by 200 points or more, and it will limit you to high-interest lenders that often aren’t worth your time.

Unfortunately, there are no “quick fixes” for credit. It can be done, however, as long as you’re committed to taking an aggressive approach and tightening your purse strings for a while.

If you can’t repair your credit enough to get favorable terms by the time you buy, you may be able to work out a no-down-payment deal with a seller. You may also have other options, and we can help you find them.

Call us at (610) 608-3119 or send us a note. We’re the Main Line real estate experts, and we’d love to help you find the perfect place.

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