Are you planning to buy a home in Albuquerque this year? In that case, it might be time to address your credit score. While it’s possible to qualify for a mortgage with scores as low as the 500s, higher scores will yield you more options and better rates, which means greater affordability and more buying power.
It is not possible to raise your score by hundreds of points overnight. However, there are a few tricks that may be able to help you move into the qualification zone or improve your rate and avoid making any silly mistakes.
Pay off collection accounts
If you’re strictly trying to raise your credit score, some older collection accounts aren’t worth paying off. If you can ensure that the creditor will report the payment to the credit bureaus, you may be able to pay newer accounts and improve your credit score. Typically, financial experts agree that you should pay your original creditor rather than the collection agency. Your lender should be able to help you figure out your best plan of action when it comes to who to pay, and how.
Pay down your balances
“The second most important factor in your FICO score is the amounts you owe, which accounts for 30% of your score,” said NerdWallet. FICO also considers how much you owe as a percentage of how much credit you have available. A higher utilization rate increases your chances of overextending yourself and being unable to make payments. Keeping your credit card balance relatively low, then, can provide a significant boost to your credit. Aim for 30% or lower.
Get a credit card
It may sound like the opposite of what you should be doing to improve your credit score, however, the right type of credit can greatly improve your score. “A credit card can be a 100% free way to build up your credit, as long as you use it responsibly,” said Credit Card Insider. “
Use Experian Boost
Experian Boost is a new product “that allows you to add utility and cell phone bills to your credit file,” they said. “Most scoring models take into account your payment history on loans and credit cards, how much revolving credit you regularly use, how long you’ve had accounts open, the types of accounts you have and how often you apply for new credit. If you’ve been making utility and cell phone payments on time, there is a way for you to improve your credit score by factoring in those payments through a new, free product called Experian Boost.”
Dispute Any Inaccuracies on Your Credit Reports
“You should check your credit reports at all three credit reporting bureaus…for any inaccuracies,” said Experian. “Incorrect information on your credit reports could drag your scores down. Verify that the accounts listed on your reports are correct. If you see errors, dispute the information and get it corrected right away.”
Sign up for automatic payments
Your payment history accounts for 35% of your credit score! On-time payments are essential with so much at s8take. Accidents do happen. Automated payments can help you avoid those costly oopsies. For setting up automatic payments, some companies, like T-Mobile, offer monthly savings.
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