How to Maximize Your Credit Rating

If you are planning to apply for a mortgage anytime soon, there are a few simple steps you can take to maximize your credit rating.

Lower balances on Your Credit Cards

Assuming that you have the cash, reduce the balances on each of your credit cards to less than 35% of the total limit on the account. If you do not have additional funds lying around, you can attempt to spread out your balances across multiple cards.

For example, if you have one account with a $3,000 balance and a $3,000 limit, try to transfer as much of that balance as you can to other cards to keep your overall proportion of balance to limit on each card as low as possible.

Keep Your Credit Accounts Open

As bizarre as it sounds, closing your credit account never helps your credit score. Sure, you can pay off and close car loans, student loans, etc., but even if you have $0 balances, keep your credit cards open.

Maintain at Least 3 Open “Trade Lines”

Maintaining at least 3 open trade lines means you should have a bare minimum of 3 accounts in any mix of the following categories:

	Car loans
	Student loans
	Credit cards.

If you do not have at least 3, open new accounts as needed. To avoid paying interest on your credit cards, always pay the balance every month.

 

The information provided on these posts have been prepared by a third party company and have been distributed for education purposes only. The positions, strategies or opinions of the authors do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax adviser for full eligibility requirements on tax deduction.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.