Simple Credit Score Improvement Tips You can Use

Credit score improvement tips are ubiquitous. So, which ones are legitimate and which are false? Well, if you’re ready to buy a home, you probably want to know some ways on how to increase your own score. After all, the higher your number, the better. But, many people either don’t understand or are misinformed about how credit scores are calculated. What’s more, they aren’t in-the-know as to what other ways their credit scores impact other areas of their lives.

The 5 Credit Score Factors

Did you know that your credit score is used to determine more than a credit card application approval. Or, a mortgage loan approval? In fact, your credit score helps to determine how much you pay for auto insurance. Companies also use FICO scores to screen potential employees. So, what makes up a person’s credit score? Well, there are five factors which determine someone’s credit score.

“There are a lot of rumors circulating when it comes to credit scores and how to improve them: Do you really need to pay a credit repair company to increase your score? (No.) Will getting married help raise it? (No.) Will making on-time payments every month give it a boost? (Yes.) If you want to make your score better, perhaps because you plan to take out a sizable loan in the future, consider [the right] strategies.” —U.S. News and World Report

Your FICO score or Fair Isaac Corporation score, comes from five elements. Your credit history accounts for 35 percent, while amounts owed contributes 30 percent. The length of your credit history is 15 percent, while your credit mix and new credit accounts both make up 10 percent each. However, this is what’s only publicly know. There are more factors and algorithms used to compute a credit score.

Simple Credit Score Improvement Tips You can Use

Although we know the five credit scoring factors, we don’t know all that goes into the calculations. But, there are some helpful things you can do to boost yours. Here are four simple credit score improvement tips you can use:

  • Dispute any errors. You can order a free copy of all three credit files once per year at Annual Credit Do this, carefully review each report. Then, file error disputes through snail mail. Be sure to include documentation. Don’t use the online form because it isn’t sufficient. Follow up after 45 days and request proof of removal or correction.
  • Negotiate balances. Most everyone has an old debt or two out there. These do hurt your credit score. But, only for a period of seven years. They drop off after that time. You can negotiate old debts by offering to settle for 24 to 40 percent. Be careful, though. When you interact with an old debt, it restarts that seven year time frame.
  • Pay down balances. Of course, one of the best ways to improve your credit score is to lower your debt level. Pay off the smallest to the largest debts, which is known as the snowball method. Then, close out some accounts so you lessen your potential debt. This will have a huge, positive impact on your credit score
  • Avoid opening new accounts. Retailers and others make opening new lines of credit tempting with tantalizing offers. But, when you open a new line of credit, you’re hurting your credit score (and your wallet). Don’t open any new lines of credit prior to or just after applying for a mortgage. If you do, it could easily cause your home loan to quickly be denied.

If you are considering buying or selling a home in Orlando, contact us for the latest market information. We’ll also provide you with the right advice about the local real estate market so you make the best decisions.