Tips to Improve Your Credit Score

If you’re looking to make a real estate purchase in the future, it’s time to start improving your credit score now. Even if you have a “good” score and are able to get loan approval, a higher score usually means a lower interest rate, which can make a big difference in how much that mortgage loan actually costs you.

Here are some tips for improving your credit score, courtesy of Nerdwallet, which notes that scores that are “fair” or below may see the quickest improvements.

1. Make frequent credit card payments. Let’s say you are paying $100 a month toward a credit card. Instead of making that $100 payment after a full month has passed since the last payment, making a $50 payment two weeks in and then again when due, for example, keeps your credit utilization rate lower than it would be if you made just one payment a month. In effect, you are keeping your “used credit” lower without actually paying more.

2. Request higher limits on your credit cards. If your credit cards will provide you a higher limit – and you don’t add any more debt – then your credit utilization percentage will go down. The lower the percentage of credit you use, the higher your score can be.

3. Find and dispute credit reporting errors. You can request a free credit report once per year from each of the major credit bureaus: Equifax, Experian, and TransUnion. Disputing inaccurate information can result in a rapid increase in your score.

4. Become an authorized user on another credit card. If a relative or friend has an excellent credit score and a low-balance card, adding you as an authorized user to that card can broaden your available credit, potentially increase the time of your credit history, and lower your credit utilization. You don’t have to use the card for this to affect your score.

5. Keep unused cards open. This will help your overall credit utilization rate stay lower.

6. Aim for different types of credit. If you have just credit cards, consider a loan and vice versa. Having both “can boost your perceived creditworthiness,” said Nerdwallet, although you want to be careful with your overall credit utilization.

7. Pay your bills on time. Payment history is very important in terms of your credit score so take steps to make sure no payments are 30 days late. If you have previous late payments, their effect on your score will lessen over time so do your best to make sure your recent history is clear.

Would you like more advice on how to improve your credit score so you can purchase an Austin-area home? Contact Texas Urban Realty today.