Excellent credit has many benefits while poor credit has absolutely none! In fact, poor credit can negatively impact your day to day life and prevent you from achieving your goals, such as becoming a homeowner. So if your credit score is below 800 you’ll want to work on improving it. Sure you may qualify for a mortgage, auto loan or credit cards with a lower credit score, but the higher the score the more benefits, like lower interest rates.
1. Review Credit
First and foremost you’ll want to review your entire credit report line by line to make sure it’s accurate. If you find information that’s not correct make sure to take the proper steps to get it corrected. Unfortunately, this isn’t always an easy process and can take time to see items corrected/removed from your credit report.
2. Pay On Time
Make all of your payments on time, even better pay before the due date and pay in full. If you don’t pay your bills on a specific day, like the 1st of each month set up an auto reminder to ensure you don’t forget and are never late.
3. Catch Up
If you have fallen behind on payments you’ll want to catch up as soon as possible. If you aren’t able to pay contact the creditor to see if you’re able to make arrangements. While this isn’t going to increase your credit score it may help keep it from falling even further.
4. Pay Off Debt
Don’t expect to max out your credit cards and still have a good credit score. Also, don’t just pay the minimum each month unless it’s a larger loan, like a mortgage, try paying off all of your debt.
5. Clear Up Collection Accounts
While clearing up collection accounts may improve your credit score there is a possibility it may hurt it too. This is an area you may not want to tackle by yourself, it’s one I personally recommend getting a professional involved in. Yes, this can cost money, but in the long run it can be well worth it.
6. Stop Inquires
Every time you fill out a credit application your credit score can easily drop, so you need to stop all unnecessary inquiries.
7. Leave Unused Accounts Open
Credit age is a factor in determining your credit score, so if you have old accounts that you no longer use leave them open and keep the balance at $0.
8. Cash Isn’t Always King
Mixed credit is another component of your score, so if you’re one who pays cash for everything and don’t have any credit cards it could negatively impact your credit score.
With that being said don’t start opening up multiple credit cards assuming it will help. Two to three credit cards is ideal because the more credit cards you have the higher your credit limit will be, which means you have the potential to go into more debt.
Your credit score will not improve overnight, it can take time, so be patient. And just because you pay bills on time doesn’t mean you’ll have excellent credit. It is imperative your monitor your credit report, review it for accuracy and always try improving it. Sometimes a person can easily increase their credit score on their own, but for others they may need to hire a professional to help them.
Article courtesy of wellingtonhometeam.com
Hermes Realty Group
Keller Williams Realty