Simple Steps to Give Your Credit Score a Kick in the Pants
By James Young on May 24, 2013
If you’ve been shopping around for a mortgage or other loan, you know full well the vital role a decent credit score history plays in getting the best rates and terms.
If your credit isn’t all that great, you may think you have no option but to take what you can get and move on. In fact, even if you have only a little time, there are easy steps you can take now to help your credit history improve in even a relatively short period of time.
The key is commitment: You must decide today that you’ll begin using credit wisely and follow these steps consistently to help your credit be as healthy as it can be:
If you plan to apply within a couple of month (or even later):
- Get a copy of your credit report from all three major credit bureaus (TransUnion, Experian and Equifax) and plan to spend some time poring over it to look for any and all errors – even tiny errors in your name, address or workplace (yep, they know where you work). If you spot any errors, report them immediately and get your report updated to reflect the most current data. Even a single late payment can have an effect on your score, so be meticulous.
- DO NOT apply for more credit while you’re shopping for a loan. You can lose 10 or more points on your credit score each time you apply for a credit card or loan, and although those points will melt away over a few months, now is not the time to take those hits. If lenders see you’re applying for lots of credit, they may think you’re in financial trouble or see your risk for getting into debt as being higher than if you just play it cool and stick with current credit and loans.
If you have a little more time before applying for a mortgage:
- Continue to pay all your bills on time each month – not just credit card bills, but all bills to avoid any late reports by companies that report to credit bureaus.
- Pay your credit card balances down as far as possible – even consider getting a part-time job to reduce the amount you owe, which will make you look like a better risk to lenders.
- Consider asking current creditors to increase current credit limits, but make SURE those increases don’t result in “hard pulls” to your credit report which, as noted above, can count against you.
Even if you can’t wait to apply or your efforts yield little improvement, don’t despair: Today, there are more options than ever for borrowers – even those with not-so-great credit – to get a loan for their needs.
Speak to an experienced lender about all the options available to you – you may be pleasantly surprised by what you learn.
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