Blogs in Real Estate

I’ve taught you how to get your credit report, how to dispute errors and how to minimize other risk factors.  All of those things can help you improve your credit score in a short period of time.  In this final installment of the course, I want to give you some basic tips that will help you improve your credit health in the long run.

These tips are not “quick fixes” but they will help you dramatically in the future if you’ll live by them.  Now, I understand that your credit is probably hurting right now because you’re not in the greatest of financial position.  When you’re in that situation, it’s hard to look at these suggestions because they seem unrealistic.  But keep these things in mind as the ideal and do your best to live by these principles.

Pay your bills on time. Proving that you can pay your bills on time is the best thing you can do to improve your score. And it’s never too late to start. Even if you’ve had serious delinquencies in the past, these will count less over time.
Keep credit cards balances low. High outstanding debt can pull down your score.
Check your credit report for accuracy frequently. There may be inaccurate information on your credit report that can be easily cleared up. Always contact the original creditor and all three credit bureaus whenever you clear up an error, so that the inaccurate information won’t reappear later. Requesting a copy of your credit report won’t affect your score if you order it directly from the credit reporting agency or an authorized organization.
Pay off debt rather than moving it around. Consolidating your credit card debt on one card or spreading it over multiple cards will not improve your score in the long run. The most effective way to improve your score is by simply paying down the amount you owe.
Have credit cards-but manage them responsibly. In general, having credit cards and installment loans which you pay on time will raise your score. Someone who has no credit cards tends to have a lower score than someone who has managed credit cards responsibly.
Don’t open multiple accounts too quickly especially if you have a short credit history. This can look risky because you are taking on a lot of possible debt. New accounts will also lower the average age of your existing accounts, something that your FICO score also considers.
Don’t close an account to remove it from your record. A closed account will still show up on your credit report, and may be considered by the score. In fact, closing accounts can sometimes hurt your score unless you also pay down your debt at the same time.
Shop for a loan within a focused period of time. FICO scores distinguish between a search for a single loan and a search for many new credit lines, based in part on the length of time over which recent requests for credit occur.
Don’t open new credit card accounts you don’t need. This approach could backfire and actually lower your score.
Contact your creditors or see a legitimate credit counselor if you’re having financial difficulties. This won’t improve your score immediately, but the sooner you begin managing your credit well and making timely payments, the sooner your score will get better.
 

I’ll keep in touch with you to see how you’re coming along in your efforts to improve your credit score.  I hope this information is helpful to you and I want you to know that I will be here for you when you’re ready to move forward with your home loan.