Your Credit Score and How to Improve it
When making the decision to purchase a home, one of the first things you’ll do is talk to a lender (if you'll be using a loan). The lender will ask about your debts and income, as well as look at your credit score (they will notify you before doing a hard pull on your credit). A credit score is a number between 300-850 and is based on your credit history, which includes your total debt, number of accounts, payment history, length of credit history, and other factors. Your credit score can impact what type of loan you qualify for and your interest rate.
If your credit score isn't as high as you’d like or it’s on the edge of getting you better terms on your loan, there are a few things you can do to improve your score. Two of the most important steps you can take to improve your credit score are to pay bills on time and pay down balances on credit cards (reducing debt). Payment activity is reported to the credit bureaus every 30 days, so taking these steps can quickly improve your credit score.
For a more extensive list of ways to improve your credit score, I’ve found a list (thanks to NerdWallet) of 9 things you can do to improve your credit score:
1. Pay credit card balances strategically
2. Ask for higher credit limits
3. Become an authorized user
4. Pay bills on time
5. Dispute credit report errors
6. Deal with collections accounts
7. Use a secured credit card
8. Get credit for rent and utility payments
9. Add to your credit mix
For the full list and details on each way you can improve your credit score, check out the article. If listening to podcasts is more your jam, check out the NPR podcast, LifeKit, and their episode on Tricks to Improve your Credit Score.
It’s also a good idea to talk to your lender and financial advisor as they may have targeted approaches to help you improve your credit score based on your specific situation.
If you aren’t already working with a lender, I’d be happy to share a list of trusted lenders I’ve worked with in the past that have provided excellent service to many clients. If you’re looking to learn more about the basics of financing, reach out and let’s schedule time to connect!