Like it or not, your credit score does matter. Whether it comes to obtaining a new home loan, getting a new credit card, auto loan, cell phone, utility bill or even a job, your credit score could be a determining factor.
For that reason, it makes sense to do everything possible, to make sure your credit score looks pristine. It could save you money in the short and long term.
In this article we will share some quick tips on things you should do, in order to help your credit score.
Keep Your Credit Balances – Below 50% Of Their Limits
The percentage of available credit you have available, is actually more important than the total amount of credit card debt. In other words, if you owe $1,000 on a credit card, but have a $2,000 limit on the credit card, it will be looked at less favorably, then owing $2,000 on a credit card, with a $10,000 limit.
For that reason, you want to aim to keep your credit card balances less than 50% of their available limit. To take it a step further, it’s ok to use your credit cards and pay them, if you are doing it responsibly, but you should use a new strategy to avoid your credit score taking a hit for high balances.
If you put a large balance on a credit card and have the cash to pay it down, do it before your current statement closes and not after, so that your statement reflects a lower balance. The credit card companies report your ending statement balances to the credit bureaus, so the real key, is making sure your statement period never closes with a balance over 50% of your credit limit.
Monitor Your Credit Report – At Least Annually
It’s a long process to build up a strong credit report history, but a very quick process to take a hit and have your credit score drop. For that reason, you want to make sure and stay on top of what actually is reporting on your credit report, even if you don’t plan on obtaining new credit anytime in the near future.
There are numerous credit monitoring services you can sign up for and many financial institutions even offer this for free with credit cards and other products. You should take advantage of these services, to make sure incorrect information doesn’t find its way on to your credit report.
You can also annually receive a copy of your credit report from all three credit bureaus for free at: https://www.annualcreditreport.com
Don’t Close Accounts With Long Histories
The average age of your credit accounts matter. Therefore, if you have an older credit card that has no annual fee, you may want to keep them open. If you close, it could lower your credit score, even if you have not used that account in a number of years.
By the same token, if you are thinking of applying for a large loan soon, like a home loan, I would avoid opening too many new accounts right before that. The average of your accounts could decrease significantly, which could bring down your credit score.
Bonus Tip: If You Need To Establish Credit – Manually Add Cell Phone and Utility Bills To Credit
If you don’t have enough established credit, you can now add things like rent, cell phone and utility bills to your credit score through Experian. You can do this at: https://www.experian.com/consumer-products/score-boost.html
This could be a quick way for someone with limited credit, to establish credit.
These are just some of the many things you can do to improve your credit score, but there are many other common sense things as well, such as making your payments on time, not having your credit run too often and not accruing too much debt, that will all put you in a position to have an excellent credit score.
As always, if you are looking to be qualified for a new home loan for the purchase or refinance home loan, please speak with a licensed lender such as Strategic Mortgage, to fully and properly pre-qualify.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 703-5844 or by emailing: bill@strategicmtgaz.com or online at www.strategicmtgaz.com
Strategic Mortgage, LLC - NMLS#158804 – AZBK#0909514 - Equal Housing Lender
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