Ways To Immediately Raise Your Credit Score
BATTLECALL GUEST EXPERT: Steve
Gillman, Real Estate Investor
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.
Got an opinion? We want to hear from you. Post your thoughts or comments here in our Mortgage Warrior Forum. Come join the conversation and say hello...onward mortgage warrior!
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