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9 Top Tips to Improve Your Credit

By
Real Estate Sales Representative with Capstone Washington Real Estate, LLC

Mortgage rates are heavily weighted by your credit (or FICO) score, so of course you want it to be the best it can be! Here are nine tips to improve your credit score:

  1. Review your current credit report for accuracy. Everyone is entitled to one free report per year from each of the three credit bureaus: Experian, Equifax, and TransUnion. You can get all three at once, or get one every four months. Make sure the information in your file is about YOU, not someone with a similar name or similar social security number! It's very common for your credit reports to have mistakes or incorrect information. Ensure the information you are being evaluated on is current and correct.
  2. Repair credit report mistakes. If you find information that is missing or incorrect, dispute the mistake by calling the credit bureau directly. Each of the credit bureaus has their dispute procedures posted on their website and they are required by law to investigate all disputed items. The investigtion is typically done within 30 days.
  3. Pay your bills on time. Payment history accounts for about 35% of your credit score so this should be a no brainer. Paying bills on time is the most important thing you can do! If you're struggling or need to catch up, contact your creditors to work out a payment schedule that works for you.
  4. Increase the length of your credit history. History accounts for about 15 of your total score. Don't cancel old cards - even if there's no balance - and don't open a lot of new accounts in a short time period. Both actions could hurt your score.
  5. Keep credit card balances low. It's a good idea to keep the balance below 25% of your available credit. Even if you pay off your cards every month, a high average balance could have a negative impact. This accounts for about 30% of your score.
  6. Minimize new credit requests. This makes up about 10% of your score. Every time your credit is run, an inquiry is recorded - that can really add up over time! If you're applying for a loan, don't apply for new credit cards first.
  7. Know that paying off a collection account will not remove it from your report. It will remain on your credit report for a period of seven years.
  8. Pay off debt rather than moving it around. The most effective way to improve your score in this area is by paying down revolving debt (such as credit cards) before paying off fixed debts (such as car payments).
  9. Beware of credit-repair scams. Don't pay someone to wipe away the negative items in your file. If they don't follow through, the damaging items will be back on your report in two or three months - and you'll be out big chunk of change!

The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Keller Williams Realty – Premier Partners in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Jamie Carroll can be reached at 360-609-6775. Steve Borwieck can be reached at 360-241-7305. Or drop us a note on the “Contact Us” page at www.sbreteam.com. We are here to help!

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The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Premiere Property Group, LLC in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Steve Borwieck can be reached at 360-241-7305. Or drop us a note on the “Contact Us” page at www.ppgwashington.com. We are here to help!

Comments (2)

Eric J
Eric J - Dream Home Financing - Freehold, NJ
Dream Home Financing

Jamie, #5 is very important. Many people just cannot pay down their cards to less than half of the credit limit. So, one way to accomplish this is to call the credit card company and ask to have your limit increased. That could help reduce the debt to limit level on the card without having to pay it all down.

Jan 06, 2010 11:38 AM
S&B Real Estate Team
Capstone Washington Real Estate, LLC - Vancouver, WA

Great idea, Eric! Though I would only recommend that to clients who are disciplined enough to NOT spend the increased limit!

Jan 06, 2010 12:03 PM