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How to Clean Up Your Credit Score
May 13, 2019 at 5:45pm | Rima Rafeh
Your credit score is one of the most important metrics a lender uses to determine whether to give you a mortgage and how much they will approve you for. Because of this, it’s important to clean up your credit score. Here are some steps for doing so quickly:
Find out what your score actually is. You can order credit score reports from the three major agencies. Contrary to popular belief, looking up your own credit score will not impact it negatively. You don’t need to pay to get your credit score (some companies will try to charge you, but it is a rip off). A good credit score is 700 or above, 800 or above is considered excellent. You should get a report from all three agencies because they cover different things.
Check and fix any errors. Mistakes happen, and a surprising number of people have a mistake on their credit report that negatively affects their score. 85,000 complaints were received by the Consumer Financial Protection Bureau between October 2016 and September 2017. You can dispute any errors with the credit bureaus. You may want to hire a credit repair company to help.
Avoid applying for multiple credit cards in a short period of time. This results in a lot of “hard” inquiries, which can lower your score. If getting multiple preapprovals, aim to get them within a 14 to 45-day window, as then they will get grouped and not affect your score as much.
Check your credit utilization. You don’t want to be above 30% of your credit limit, that is to say, if you have a $2000 credit limit, you don’t want to owe more than $600. If you do, pay your debt down to that limit as much as possible. Resist the temptation to charge more when your credit limit goes up.
If you have no credit history, open a credit card, but use it sparingly. Make sure you don’t get it closed due to inactivity but avoid putting a lot on it. If you have problems, consider a secured credit card that requires a deposit, which serves as your credit limit.
Pay any outstanding debts as quickly as you can.
Fixing your credit score is a vital step to getting the home you deserve. Make sure that you keep your credit utilization low and pay off any debt as soon as possible to keep your score in the good to excellent range. To find out more about home buying and credit, contact Rima Rafeh Real Estate today.