If you are interested in purchasing real estate, either as a personal residence or as an investment, a good credit score can go a long way. You will want to make sure that you are staying up to date on all your accounts because even missing a few payments can cause a noticeable drop in your credit score. If you have struggled in the past with your credit score or are looking to obtain a loan in the future there are some strategies that you can begin implementing today to improve your score.
Look at Your Credit Report
The first step to take if you want to improve your credit score is to educate yourself on what your credit report really looks like. This is much easier to do today than it was in the past with the help of the internet. You are allowed to see a free credit report from each of the three big bureaus each year. It is difficult to correct what you do not know about, so take the first step and look at your credit report.
Pay on Time
Even if you have had a hard time in the past make sure that you begin paying all of your accounts on time. Around 35% of your total credit score is a result of if you are making payments on time. If you have a hard time remembering when your payments are due try setting a reminder on your calendar each time you receive a bill in the mail. Many companies also offer a convenient option to set-up auto pay on your account where you give permission to the company to take the funds directly from your checking account each month.
Bring Your Accounts Current
If you have accounts that you are currently behind on, you need to bring them current ASAP. Work to quickly correct any accounts that you are more than 30 days behind on. If you are behind on an account your credit score will continue to be impacted every month, even if you make the current month’s payment, until you are able to pay any months that you missed. When you look at your credit report, verify if you have any accounts showing that were charged-off or that have collections on them. If so, you need to work quickly to pay those balances off.
Have Delinquent Items Removed
Once you have paid the balance on any accounts that had collections or were charged off you need to have them removed from your credit report. While this seems like something that should happen naturally, you typically need to work at making it happen. There are also companies that work on repairing your credit. If you work with one of these companies they will work directly with the credit reporting agencies to remove delinquent accounts that have been paid from your report.
Pay Down on Your Debts
If you have loans or credit cards with high balances you need to begin to work on paying them down. While making the minimum payment on time is good for your credit, high balances can still bring down your score. If you have balances that are at or above 80% of your credit limit you want to begin making extra payments on them to lower your balances. Being maxed out on your cards lowers your credit score. Paying even just several dollars more each month can help improve your credit score over six months if done consistently.
Improving your credit score is not something that you are able to do at the drop of a hat, but it is worth the time and money that you invest into doing so. Good credit scores not only provide you a better chance of getting approved for the loan that you desire, but also help you to get a lower interest rate as well. Begin the process today of improving your credit to help you in the future.