If you’ve lost your home to foreclosure, you may be wary about buying again and you’re not alone. The good news is, buying a home after a foreclosure is possible! It always pays to find out the facts about applying and exploring your options. Here’s three steps you can take to get started with your […]
Low credit score? Try these four tips to raise it
Your credit score can range from 300 to 850 and is determined by factors like:
- Your payment history
- Types of credit you use
- Length of your credit history
- How often you apply for new credit
Together, this information makes up your credit report, which can affect loan eligibility. A good credit score can offer many benefits to homebuyers, such as better terms and lower interest rates.
Why is my credit score low to begin with?
Here’s some things that may lower your credit score:
- Late or missed payments
- Too many lines of credit
- No credit history
- Too few types of credit
If your credit score is below average, here are four common ways you can improve your credit score:
Check your credit report for errors
Errors on your credit report can cause you to take a hit you didn’t deserve. Carefully review your credit report for errors like:
- Accounts that aren’t yours
- Inaccurate personal information
- Information older than seven years
Under the Fair Credit Reporting Act, “both the credit reporting company and the information provider are responsible for correcting inaccurate or incomplete information in your report.” If you see errors on your credit report, you have the right dispute and get them corrected as soon as possible.
Request that negative entries be removed
If your credit report has negative entries that have been paid off, request that they be removed. These could be a collection account that has been paid off or a late payment that was paid in full. While this type of removal can take more time and effort, it is worth it to help improve your credit score.
Pay all bills on time, every time
Paying all credit card and loan bills on time is a great way to improve your credit score. This includes credit cards and loans. Each time you make a payment on time, this positive information is updated to your credit report. In other words, the longer you have a history of paying bills on time, the higher that part of your credit score will be.
If you have trouble remembering to pay on time, setting up automatic bill payments each month can help.
Only request new lines of credit when necessary
Avoid requesting new lines of credit and only open them if necessary. Too many open lines of credit can work against you since credit inquiries can affect your credit score.
If you don’t currently have the money to purchase something, paying for it with a credit card, old or new, can set you back. Instead, save up the cash before you use your card. In the end, sticking to a balanced budget will keep your credit healthy so you can take out a loan for large expenses when they are really necessary.