Remember the last time you went to the doctor and they asked, “On a scale of 1-10, how much pain are you in?” You might also think of it on that smiley face-to-frowney face chart. Instead of anti-biotics or vitamins, you may be looking for a financial cure if your credit score is negatively impact your ability to get the home loan you need. Here are five things you can do that can improve your credit score.
5 ways to improve your credit score before buying or refinancing your home
While there might not be any physical pain with having a low credit score, there’s definitely a good amount of stress and urgency that sets in when you see that number dropping. If you need or want to improve your credit score, here are five tips that can help you turn that frown upside down and improve your credit score until it’s where you want it to be.
Tip 1: Understand how your score is calculated.
It’s nearly impossible to improve your credit score if you don’t know (1) what it is, (2) how it’s calculated, and (3) what factors go into it in the first place. Do some research and get some insight about what makes up a credit score. There are many ways to find out what your credit score is, and most places that give you your score will give you a breakdown of your score, what compiles it, and why it is where it is. You wouldn’t know how to fix a car if you didn’t know how it worked and the same can be said for your credit score. You can’t improve your credit score if you don’t know what’s wrong.
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Tip 2: Check your score frequently.
A watched pot never boils, but your credit score does whether you watch it or not. When you are working on maintaining or you want to improve your credit score, check it frequently enough to make sure you are still headed in the right direction. Credit bureaus update scores every month, so either set a date in your calendar to check it every month, or set up email reminders to make sure you check on your score. Whether you prefer to check your score online, or get it in the mail, make sure you get it done often.
Tip 3: Make sure your report reflects accurately.
When checking your score every month, make sure everything looks right. Check on your balances month after month and doing things like making sure there are no late payments that shouldn’t be there can really help you out. Look for errors. There are many ways to get things off of your credit report that shouldn’t be. If you want to know more, look into the Fair Credit Reporting Act to find out how you can stay on top of it.
Tip 4: Pay your bills on time.
Staying organized when it comes to bills is the key to paying them on time. Even if you have a lot of debt and open accounts, just making payments on time can help improve your credit score.
One of the best ways to make sure you pay on time is auto pay. It might seem like a difficult routine to set up at first, but over time it will take away the stress of always having to remember. Also, at least once a year, make a spreadsheet of all your monthly recurring bills to not only see where you stand, but to make sure you have it on your schedule to pay each month.
Tip 5: Keep in mind, good debt is OK!
When reviewing your credit report, it might seem stressful to you to see all of the open accounts and debts you have. Keep in mind: it’s OK to have good debt. In fact, it’s important for your score to have a strong history. This tip links directly back to tip 3, because if you are paying your bills on time, it will help you in the long run. Don’t get discouraged by debt, but learn how to manage it well.
Once you’ve done your homework, you know where you stand and what you need to do. Take steps to make sure you have your score where you want it, and you will be prepared to do what you need to in life, including making big purchases like cars and qualifying for a mortgage for your potential home.
Seek out help from professionals in the mortgage industry when making choices regarding your credit and its improvement. One of the biggest purchases you will make in life will be a home. No matter what circumstance you are in, make sure to do your best to be prepared.