Your credit score can range from 300 to 850 and is determined by factors like:
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:
If your credit score is below average, here are four common ways you can improve your credit score:
Errors on your credit report can cause you to take a hit you didn’t deserve. Carefully review your credit report for errors like:
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.
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.
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.
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.
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