Improving Your Credit Score

Poor Credit ScoreEvery point of your credit score is more crucial than ever. Is there anything you can do to improve your credit score beyond paying your bills on time?

If you are considering obtaining a mortgage within the next 12 months, you should meet with your Mortgage Professional to help advise you on this process. Some steps in repairing your credit may actually temporarily lower your scores (such as paying off a collection). What steps you should take depends on how soon you plan on buying a home or refinancing.

Obtain a copy of your report from annualcreditreport.com. You are allowed one free report from each bureau annually, so you can get three free reports. Consider pulling one report at a time rotating the three bureaus every four months. You may have to pay a fee to obtain the credit score number.

Review your credit report for errors and contact the creditors demanding corrections. The contact information should be included with your credit report. Keep a phone log of any conversations and follow up with a certified letter. Request a confirmation letter for your records of any corrections the creditor offers to make.

Pay past due accounts current. Your credit score is penalized for any accounts carrying a past due balance.

Keep your balances below 50% and 30% of their credit limit. Review your credit report to see which accounts are just over 50% or 30% of the available credit line.

Don’t close your old accounts in good standing. The scoring modules favor established credit and not new debt. Keep your old card with a zero balance and use it once a month to fill your tank with gas and then pay it off each month. Also, closing your accounts does not make them disappear from your credit report.

Avoid obtaining new credit. That new car will not only impact the amount of a mortgage loan you may qualify for, it may also impact your credit scores as a new maxed out debt.

The good news about your credit score is that it is not permanent. It’s intended to reflect your current credit behavior. If your credit is a mess, it will take more time, effort and determination to repair it…but it can be done!