One of the keys to a successful home buying transaction is having your finances in order. In fact, your credit rating is one of those critical considerations. We’re going to explore various ways of improving your credit score.
- Raise it Fast
- How to Increase Credit Score in 30 Days
- How to Improve Your Credit by 200 Points
- How to Raise a Credit Score with Credit Cards
- How to Raise your Credit Score Without Credit Cards
- How to Raise your Credit Score by Paying off Debt
- How to Earn a Higher Score After Foreclosure
- How to Raise your Credit Score after a Divorce
Raise it Fast
You can raise your credit faster using the following strategies:
- Clear your existing balances like a star: this has the most immediate and biggest impact on your credit score.
- Update your bills: paying bills on time positively impacts your score. Pay those pending bills faster and watch your rating rise.
- Open a new account: when you open a new account, it improves your utilization, increases your credit line, and increases the credit mix indicating the ability to handle different accounts.
- Piggyback: you can always use the perfect credit rating of your partner or family member to improve your own by becoming an authorized user.
How to Increase Credit Score in 30 Days
We have all messed up somewhere, and such mistakes sometimes do impact our credit rating. A bad credit score could stop you from buying that house you desire. But there are ways to improve that credit score substantially over a 30-day period.
- Cut down your revolving balances to less than 30%: the total credit card debt constitutes 30% your FICO score. Credit cards make up the bulk of all revolving balances and paying them up improves the credit score substantially.
- Remove that late payment: the difference between a 780 and 680 score is sometimes a single late payment within the last 30 days. A late payment can drop your score by between 60 and 110 points.
- Raise that credit limit: if you have low balances and negotiate to raise the card limit softly, it improves the ratio between revolving balance and credit instantly enhancing your score.
- Eliminate collection accounts: scoring a 780 requires you to have that collection account deleted and any other disparaging items.
- Check your old cards: sometimes we get that new card that we use everywhere, every day, and forget about the old card for months. That is bad because creditors want to see that you regularly use the credit availed to you.
- Get some credit: if you don’t get any credit, then you have no history, therefore a bad score. Get a credit account whose reports help improve your credit score. Ensure your credit account is active. Tip! Getting a secured card that reports to all three bureaus can dramatically improve your score in 30 days.
How to Improve Your Credit by 200 Points
Do you want to raise that score by 200? You can use the following ways to do so:
- Invest in a monitoring program: fixing your messed-up credit score needs some special attention. A monitoring program updates your information every 30 days allowing you to take charge of your credit score destiny.
- Build your credit: one mistake that many people make is overusing their credit line. Stay focused and reduce balances to within the 30% utilization ratio.
- Use your card sparingly: use your credit like cash to stay within the affordable limit. If you cannot afford it while paying in cash, why use the credit card? The credit balance computed every month affects your score since living beyond your means is a risk to your credit provider.
- Dispute the old information: in some cases, our credit history contains outdated, erroneous, and often misleading data that negatively influence the report. While collection agencies use information advanced to them by credit companies, that information can remain outdated. Follow up and clean your report.
- Settle old debts: when you settle old debts, creditors may help you by removing negative information from your report.
How to Raise a Credit Score with Credit Cards
To raise a credit score with Credit Cards, you may employ the following strategies:
- Pay fully on time: create a good credit score by borrowing and paying your debts on time.
- Be wary of excessive debt: in the same manner that you use your debit card, treat the credit card with caution and control your spending.
- Keep low balances on your card: your FICO score is a combination of several factors, most important being your outstanding debt, credit utilization, and the ratio between credit and credit line.
- Keep accounts open: lenders love predictable clients. Therefore, open a credit account and maintain it for as long as possible while using it responsibly. Keep one reliable card and use it.
- Lastly, use your cards smartly: obviously, improper use of credit cards badly influences your rating. When you use your prudently, it helps build your credit score without incurring debt.
How to Raise your Credit Score Without Credit Cards
There are people who wonder how they can improve their credit score without credit cards. This is how you can do it:
- Request your billing company to report on your behalf: those recurrent bills you settle every month may help improve your score if they are reported to TransUnion, Experian and Equifax.
- Authorization on another person’s card: if you can become an authorized user of a card with a great score, it improves your rating.
- Apply for a loan: when you pay your loan installments on time, it is an indication that you are a responsible borrower improving your FICO score.
- Take a federal student loan: federal student loans do not require any credit checks, but they improve your rating if installments are paid on time.
- Explore peer-to-peer loans: various companies offer such loans and borrowers are connected to investors but with much lower interests.
How to Raise your Credit Score by Paying off Debt
Paying your debt in the right way can significantly shine a light on that magical credit score. There are several approaches to this strategy, but the key is paying those debts on time. Whatever the strategy you choose, make sure it motivates you to clear any outstanding balance.
- Debt avalanche: the method entails paying those debts with the highest interest rates first followed by those of lower interest. Put all extra money towards clearing your debt until it is all done.
- Debt snowball: this strategy entails organizing your debts in the order of highest to lowest balance. Make necessary payments towards all the loans but target all extra cash on the small balance until they are cleared.
- Snowflaking: you can use this method in conjunction with those mentioned above. In this method, all extra goes towards repaying outstanding debt. While they may be small, the cumulative monthly payments are substantial. Creditors can increase your limit if your credit utilization is attractive.
How to Earn a Higher Score After Foreclosure
It is devastating that someone must go through foreclosure. While you may lose access to some of your credit cards if you default on your home loan, it is not always the case. Keep your credit cards and use them consistently and prudently.
- Your secured cards are your pie: there are many credit card issuers and banks that offer secured credit cards. Competition is stiff, but many issuers still charge a premium fee on the application, annuity, and even billing. Shop around and find the most suitable secured credit card with affordable fees as it will help improve credit score over time.
- Have paid your local credit union a visit? Credit unions have a reputation for offering low-cost loans, mortgages and credit cards and are also accommodating to past defaulters. What’s more, they are not risk-averse, and if you have a foreclosure behind you, they may as well be your only hope since other institutions have more stringent requirements.
- Stay on top of your debt and monthly payments: late payments have a considerable negative impact on your already damaged credit score. You will need to keep all pending debt and monthly payments on the positive trajectory to rebuild your credit score. If you can maintain a consistent history of on-time payment of debts, the impact on your credit score is immense, and over the long term, it can rectify the rating to previous highs.
- Be patient before applying for new debt: it is unlikely that any creditor would be willing to advance debt to you immediately after foreclosure. Using the strategies highlighted above, make a deliberate attempt to improve your credit rating. Well, a foreclosure is bad enough, but with an indication that you are willing to change habits and improve ratings, creditors may just advance you a new card if your rating is attractive enough. During the financial crisis of 2008, there were multiple foreclosures, and creditors now tend to be lenient and forgiving if there is an improved outlook.
How to Raise your Credit Score after a Divorce
Going through a divorce is hard enough, and the impact on your credit score can be messy as well. Paying attention to credit standing will assist you as you rebuild your life.
- Establish an income and stick to a budget: the most important aspect about rebuilding your credit profile is paying debts on time. But you are not going to be able to do that without a reliable source of income. In some cases, alimony and child support can make do, but if that is not enough, seek an alternative income.
- Evaluate your credit report and score routinely: keeping an eye on your credit rating will help you figure out ways of improving it. The three major bureaus offer a yearly credit report, but you can purchase additional reports to remain abreast of your rating.
- Watch out for joint debts between you and your ex-spouse: close all accounts between you and your ex-spouse. With such accounts, you never are in control of your credit history.
- Get the help of a credit counselor: commonly, divorcees struggle with bills for months or years after the divorce. Credit counselors can help you make better decisions if you face trouble with your bills. Such counselors can assess your financial situation and help you make better financial decisions that will improve your standing steadily.
- Get a new name before applying for new credit: if you intend to change your name from that of your husband, do so before new credit applications. That way, you can start a new profile with a clean slate.
- Get your credit: if you and your spouse have been sharing a credit, you need to build a new independent profile. Creditors want to see that you can manage credit prudently. Therefore, with your line of credit, make timely repayments every month after borrowing. If you have an existing account in your name, that is impeccable. Work on making payments reliably every month and keep the utilization at 30%.
If you want to attain sufficient credit score too buy a new house, the most important thing is to enhance your knowledge. You must understand how to keep your credit rating appealing consistently.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.