Once you have decided that the only way forward to make that dream home purchase…
Having an excellent credit score offers opportunities that a poor score cannot. Consumers with good credit receive affordable interest rates, faster loan approval, and higher credit limits. How you spend your money and pay your debts impacts your credit scores in long-lasting ways. Some of your borrowing history remains visible for many years. Keep reading to learn about five strategies that may help you to improve your credit score.
Keep an Eye on Your Credit Report
The three major credit bureaus are Experian, TransUnion, and Equifax. They monitor and collect data on most consumers residing within the United States. On occasion, some of the data the bureaus collect are inaccurate. It’s up to consumers to monitor their credit report to ensure the information is accurate. Failing to do so can lead to negative changes in your credit score.
Pay Your Bills
Your payment history is an essential aspect of the scoring strategies used to calculate credit scores. Not only must you pay your bills on time, but you must also meet the minimum payment required to earn a good credit score. Paying your bills efficiently reflects your ability to manage your financial debts responsibly.
Space Out Requests for New Credit
When you apply for a new form of credit, the lender submits an inquiry to check your creditworthiness. The impact on your score is usually insignificant. Your credit score may drop a mere five points. However, when you apply for numerous forms of credit or do so frequently, the impact is much greater than five points. Spacing out your applications for auto loans, mortgages, home equity loans, and credit cards helps to minimize negative changes to your score.
Take Out a Small Loan
Believe it or not, having a small loan may boost your credit score. Just as with any form of borrowing money, you need to make monthly loan payments on time and in full to avoid hurting your credit score. Keep in mind that applying for or having numerous loans may lower your credit score. The size of your loan should be affordable for your budget.
Boost Your Credit Score
If you are one of the many consumers who don’t have a lot of credit history, you may want to consider boosting your score. Experian provides the option to include payments for utilities and phone service to the information used to calculate your credit score. If you need to improve your credit score quickly, you should look into Experian Boost, the program that provides this option.
Consumers who borrow and spend money responsibly find it easier to maintain a good credit score. Keep in mind that good credit doesn’t happen on its own. Use common sense when it comes to borrowing money to avoid spending more than you can reasonably afford. If you actively make an effort to improve your credit score, you should see it improve.