5 Ways to Improve Your Credit Score

5 Ways to Improve Your Credit Score

A healthy credit score is a prized possession to many, but if your score needs some help, it likely won’t happen overnight. This is largely because your credit score takes into account information from the past several years, not just your present actions.

That doesn’t mean that your credit score is a lost cause though. You can turn around a less-than-stellar score faster than you might think with these simple steps:

Keep Your Balances under Control

A major factor that goes into creating your credit score is how much credit you have compared to how much of it you’re using. The smaller the percentage is, the better it is for your credit score. 30% or less is the optimal range to be in, as it shows that you are able to use credit responsibly.

If you’re one of the many who has multiple credit cards, consolidating those balances with a personal loan can also help your score.

Even if you pay your balances in full each month, you might have a higher credit usage percentage than you’d expect. Some credit issuers report your statement balance to the credit bureau, so even if you’re paying it in full every month, there is still an existing balance

Eliminate Nuisance Balances

Another way your score is determined is by how many of your cards have outstanding balances on them. Charging small amounts to multiple cards is worse for your credit score than using the same card (though hopefully one with a good interest rate).

Pay off those cards with small balances, and use one or two go-to cards instead.

Use a Calendar

When shopping for a car, home, or loan, it’s best to do your shopping in as short a period of time as possible. Every time you apply for credit, it can cause your score to dip down slightly for up to a year. The thought is that if a person is making multiple applications for credit, they want to use more credit than they have already.

Fortunately though, the credit bureaus do not penalize you when trying to shop around for the best rate for a home loan. For scoring purposes, even if you had your credit pulled at a dozen (or more) mortgage companies within a 45 day period, it would only count as one inquiry.  If you had your credit pulled at two different mortgage companies 46 days apart, it would count as two distinct inquiries.

Pay Bills on Time

Making a big purchase like buying a home or a car often requires putting together a sizeable amount of cash at once. This, on top of the usual monthly bills and expenses can cause you to fall behind over time. Making late payments is one of the fastest ways to tank your score, even if you end up with a substantial amount in savings as a result.

Making your monthly payments on time, every time is one of the best ways to let creditors know you are consistent and serious about your debt.

Don’t Portray Yourself as a Risk

Sometimes the best way to improve your score is to do nothing at all. Don’t do anything that the credit agencies frown upon that could drop your score.

Two of the biggest things to avoid doing are missing payments and drastically changing how much you pay or charge on your credit cards. Taking cash advances or even using your card at places that could indicate financial trouble like a pawnshop should be avoided if possible, as well.

The key here is to not do something that makes you look like a risk to a potential creditor.

Don’t let a less-than-perfect credit score keep you from the home of your dreams. These simple tips can have your credit score on the fast track to recovery in as little as 60 days. When the time comes to buy that dream home, know that Butler Mortgage is here to assist. We understand that every situation is different, and we pride ourselves on finding mortgage solutions to suit your specific needs. Contact us today at 407-931-3800 with any questions.

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