Strategies To Increase Your Credit Score

Your current credit score tells a story about your history with borrowing money. It shows how timely you are on payments, how responsible you are with it, and how you manage it.

A high credit score communicates that you have proven yourself capable of paying your bills on time and are responsible when managing credit. Your credit score will also impact the interest rate that you receive on a loan. So, when we are talking about mortgages, maintaining a great credit score is very important.

Here are 7 ways you can improve/maintain your credit score:

1. Have at least 2 credit lines at all times
This means that you should always have two “trade lines” going. Whether this be two credit cards or a credit card and a line of credit or a car loan, etc. You want to show that you can manage credit, and this is one easy way to do it. As an added note, the limit on each credit line should be set at a minimum of $2,000.

2. Make your payments on time each and every month
Never skip payments! You should ALWAYS make the minimum payment required on all your lines of credit each month.

3. Do not pull your credit report too often
Having your credit pulled for new credit cards, car loans, and other things frequently raises a red flag for lenders and can significantly lower your credit score.

4. Do not exceed 50% of the available credit limit on your credit card or credit line
This one can be hard to do if you don’t have access to your balance online. One way you can monitor this is to only use a credit card for certain fixed bills such as a cable/internet bill, cell-phone bill, etc. This way you can easily keep track of what credit you have used and what is still available. 

5. If you have missed a payment, get back on track right away
If you did miss a payment, do not fret. Instead, get back on track with your monthly payments. Lenders would look at the one missed payment as an abnormality versus a normal occurrence if you are back on track by the following month.

6. Make sure each borrower establishes their own credit
It can be frustrating for couples when they realize that all their credit cards and lines of credit are only under one name, leaving the other person with no proven track record of managing credit. Make sure all joint accounts report for each individual.

7. Do not exceed the credit limit
It is important to never exceed the credit limit you have been given. Having overdrawn credit, shows the lender that you are not able to properly manage credit.

If you follow these 7 steps and remain responsible with your credit, you will have no surprizes when it comes time to purchase a home. Contact me today if you have any questions or would like help developing a strategy to improve your credit score.