Finances – Want to Raise Your Credit Score? Here’s How No matter what type of mortgage you are applying for, you can rest assured that the program is going to require a minimum credit score. Depending upon the type of loan and the amount of down payment, credit score minimums can vary.
Most conventional loans ask for a minimum score of 620. If you’re just starting out to establish your credit history, or if you have a credit history but it has a few blemishes on it, it’s possible your existing scores are too low at the present time for the loan you’re looking for. But there are some things you can do right away to nudge those scores back up. Even for someone with a score near 700, these tips can help as well.
Make Your Payments on Time
You of course want to always make every effort to make credit card and other loan payments on time. There is a key number of days though that you never want to extend past. That key number is 30 days past the due date. Let’s say an account has a due date on the 5th but you don’t get paid until the 15th. If you pay it on the 15th it won’t be counted as a late payment on your credit report. You may have to pay some late payment penalties for making your payment after the payment due date, but staying inside that 30-day window will ensure that nothing gets reported to the credit bureaus.
Keep Balances to About 1/3 of Your Total Available Credit
Think paying off all your debt and keeping your credit card balances at zero is the way to go? Believe it or not, that’s actually not the case. Your scores will actually improve if you show a small balance and a history of making timely payments. If there’s no balance, there are no payments being made and therefore no history. Timely payments account for 35% of the total score, while proper balances make up 30%. You can tell right away that concentrating on these two tips alone will have the greatest impact, and that being sooner rather than later. For those with sterling credit, this category will carry the biggest punch.
Keep an Eye on How Many Accounts You Have Open
You also need to pay attention to how many credit accounts you have. When first starting out with credit accounts, there will be credit inquiries made by the creditors you’re applying with. Most mortgage programs ask there be at least three credit accounts appearing on a credit report. Once you’ve reached these numbers, stop applying for more accounts and instead focus on using a small portion of your available credit and regularly making payments on time. Don’t apply for additional credit. A few initial inquiries for credit won’t hurt your scores, but multiple requests over an extended period of time will actually impact your credit score, driving it lower.
This article is for information, illustrative and entertainment purposes only and does not purport to show actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular investment action.
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