When applying for a home loan, one of the biggest factors that will come in play is your credit score. Your credit score is a numerical score based on your present and previous credit files, based off of credit limit, whether or not payments are made on time, etc. We provided a few steps that can help you raise your credit score in no time.
Expand Your Credit Limit
The bigger your credit limit, the higher your credit score can become, but only if you’re using a small portion of it. You should never exceed more than 30% of your credit limit at any given time if at all possible. Even if you only have two credit cards with a $5,000 credit limit, there’s always the possibility to be added to someone else’s credit card account. With the increased credit limit, now you boost your credit. Make sure the account you’re getting added to is someone you trust.
Decrease Your Debt as Quickly as Possible
You may find yourself in a position where you’re over the ideal 30% range of your credit use. That’s okay, because you can always try to decrease your debt quickly if you have the means to. The sooner you owe less money, the sooner you can raise your credit score will rise.
Raise Your Credit Score and Pay Bills On Time
This one seems like a no brainer right? Believe it or not, everyone has missed a bill payment at least one once their life. Whether it was electric, car, cable, you name it. It’s understandable that life can get rather hectic and sometimes things slip your mind. Bill ideally wouldn’t be one of them. Missing one payment towards something you owe credit to will stay on your credit record for years. If you have trouble remembering to pay bills, be sure to set a monthly reminder on your phone, or even make a physical note of it on a calendar you might have hanging up.
Keep Any Balances Low
Ideally your balance on something like a credit card will be low. The higher the amount of credit you’ve charged, the lower your credit score could potentially be. Additionally, the lower your credit balance, the easier it could possibly be to pay it off quicker if you need to. It’s always best to plan a few steps ahead when trying to increase your credit score.
Don’t Cancel Unused Credit Cards, It Won’t Raise Your Credit Score!
If you have a debit card that isn’t charging you any annual fees, it’s actually best to keep it around as long as you can. The more credit lines you have open the better, plus it will increase the average length of an open credit line, which is also another great thing to grow. You should know that sometimes credit card companies will automatically cancel your card if you have no credit to pay off, and it’s been inactive for a few months. Granted, this is a case by case scenario with cards, but it’s best to to look into this if you want to keep the card around. Even if your credit card provider does cancel the card for inactivity, you can always charge a few dollars to it and pay it off every month.
We absolutely understand that circumstances dictate whether or not one can work towards raising their credit score. Even working on one or two of the ways pointed out above can raise your credit score in as little as a month. If you’re working towards increasing your credit score towards a home loan, be sure to contact one of our loan officers once you’ve reached your goal.