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Houses Under Fifty
Thousand |
Raise Your Credit Score
Is it important to raise your credit score?
It may be. Lenders each have their own "break points"
between scores that get you one interest rate or another. If
you have a score of 688, and the lender drops the mortgage rate
by .5% at 690, those two points can cost you an extra $20,000
in interest on a $170,000 loan (over 30 years at 6.5% instead
of 6%). Is that important to you? What can you do about it?
Ways To Raise Your Credit Score
Fortunately there are ways to raise your
credit score. Some take more time than others to have an impact,
but if you start working on it now, you can boost that score
before long.
1. Check your credit reports for errors.
If there are any errors that may be hurting your score, contact
the credit reporting agency that issued the report and challenge
the error. They are obligated to investigate and correct any
mistakes within thirty days. If the cerditor doesn't respond
to their inquiries, they have to automatically remove the item
in question, although you may have to remind them about this
part of the law.
2. Pay all bills on time. You may even
want to borrow money to get those bills paid on time, if you
have to. Paying on time is the thing that has the biggest positive
impact on your credit score. Paying off old delinquencies won't
immediately raise your credit score, because these will still
show as being paid late, but start paying on time now, and with
time, these old late payments are deemed less important.
3. Have the right number of cards. At least
two cards is best, and having more than five or six can actually
lower your score.
4. Pay off your balances every month. This
is just good for your future, as a way to keep you out of excessive
debt. It can save you a lot in interest charges too. It also
demonstrates your ability to manage your debt, and so increases
your credit score.
5. Manage your balances. It is best for
your credit score if the balance on a given card is less than
50% of the limit on that card. Manage your use of the cards to
keep the balances below this amount. For example, if you have
three cards with limits of $2,000, $3,000 and $2,500, it is better
to have a $600 balance on each than $1800 on one.
6. Keep the right cards. If you close accounts
or cancel cards, do it right. Old accounts are better than new
ones for your credit score, so keep those old ones open, even
if the balance is zero. Also, because it is best to keep balances
below 50% of the card limits, you may want to consider canceling
your lower-limit cards if you regularly keep balances on your
cards.
7. Don't apply for too many loans
and cards. Too many inquiries on your credit reports lowers your
score. Don't apply for a lot of cards in a given year.
8. Be careful whom you borrow from. Furniture
stores and others help you finance your purchases through finance
companies, and this can lower your score. It is better to borrow
the money from a bank or credit union.
You may have noticed that this is almost
a list of things that your lower credit score. It really is,
and you should keep that in mind. Just pay things bills on time
and don't do things that lower your score - that's the best way
to raise your credit score.
Houses Under
Fifty Thousand | Raise Your Credit Score |