Improving your credit score can be a longer process than you might like it to be, but it’s essential if you want to qualify for a mortgage and buy a home. If your credit score isn’t where you’d like it to be, follow the steps outlined in this article to bump it up. Your score won’t change overnight, but in time, you can see drastic results which can significantly help you qualify for a loan.
Here are 10 steps to improving your credit score.
1. Make sure your credit reports is right
You should be smart and check if all the items contained in your credit report are accurate– this isn’t always the case, but sometimes there are mistakes in there that could cost you money! Get in contact with the credit bureau that contains errors and make sure they get fixed. Keep in mind that you will probably have to provide some sort of verification for these errors.
2. Make payments on time
This seems like a given, but some people just can’t seem to remember when the first of the month is coming up. Myself included! Time just has a way of flying right by the first of the month and leaving me wondering where the days went! Do whatever you need in order to make sure you get those payments in on time. Try scheduling your payment due dates on Google Calendar or some other calendar or schedule app on your electronic device. Late or missed payments can seriously mess with your credit score and you don’t want something as silly as that keeping your score down!
3. Pay bills in full
You should always be making at least the minimum required payment on a bill, but try to pay it off if you can. Paying bills in full will make your debt amounts lower and this is a positive thing for both your credit score and your preparation to purchase a home.
4. Pay debts off as fast as you can
If you have several different debts that you owe, pay the one with the highest interest rate off first and then work on the others from there. By focusing on the debts with high interest first, you’ll pay less over time.
5. Don’t push the limits with your credit card
If your card has a maximum of $2,000 on it, it wouldn’t be smart to try to spend more than that. Credit card companies don’t like that and they’ll penalize you by hurting your score. Don’t use more than what you have. And don’t get too close to your maximum.
6. Have a history of using credit
Many young people will have a low credit score simply because they have not used or bought anything with credit and companies don’t know if these individuals can be trusted. Get a credit card or line of credit and use it. Pay for rent, utilities, insurance, or other bills with your credit and then pay it right back! By using the credit and then immediately paying it back, you are improving your credit score over time.
7. Don’t do too many credit applications at one time
Your score could actually be lowered if too many lenders pull your credit information at the same time. So, be smart and just use one lender at a time if you’re thinking about getting qualified for a mortgage loan.
8. Don’t trust a company that claims they can improve your credit score
No one has the capability to edit or make changes to your credit score except the two credit bureaus in Canada named Transunion and Equifax. Those companies will not remove correct information from your credit report. Only you can make the changes necessary to get your report fixed. Be wary of any individual or company that promises to improve your credit score after paying them a fee. Remember– they can’t do anything more than you can do, so make the small necessary changes to improve your score now.
9. Don’t bounce checks
You should always be aware of how much money is in your bank account and don’t write checks that don’t have sufficient funds to be cashed. This makes you look bad, irritates companies who try to cash the check and can influence your credit score for the worst. Check your account often or keep a register to know how much money is in your account.
10. Here’s what’s included in your credit score
Your credit score has your personal identification information, and it might contain information about your employment. It will have a record of organizations who have recently asked for your credit report. It will have any public record information like collections, bankruptcies, or judgments. Finally, it will contain your payment history for accounts that are reported to the Credit Bureaus. Your score is made up of your payment history, the credit you’ve already used, and any negative information like a bankruptcy or collection.
Improving your credit score is simple – make payments on time and use your credit responsibly and you’ll see your score raise in time. Be patient and know that these efforts will all pay off in the end!