Is your credit score lower than you would like? Are you thinking about applying for a mortgage? If so, you need to get your credit score higher so that you can get the best interest rate and terms available.
Luckily, there are a few simple ways that you can quickly boost your credit score and get the best mortgage terms.
Dispute Inaccurate Information
You may not even realize that inaccurate information is what is bringing your credit score down. Whether it’s a late payment that you actually made on time or a credit card that doesn’t belong to you, these things can affect your credit score.
Before you apply for a mortgage, request your three free credit reports here. Then take the time to go through each report and make sure everything is accurate. Look closely at each account. Is the current balance accurate? Are your payment dates accurate? Does the account belong to you? Did you close the account? These are things you should look for and make sure everything on the credit report is 100% right.
If you find mistakes, make a request in writing to have them fixed. Make sure you provide ample proof as to why what is on your credit report is wrong. It’s also a good idea to follow up with the creditor reporting the information to make sure they follow through as well.
Pay Your Credit Cards Frequently
Rather than sticking to the once-a-month credit card payments, increase your frequency. If you can, pay the bill twice a month. It’s best if you make a full payment each time, but even if you split your monthly payment into two payments, it will decrease your balance faster. This may lower your utilization rate, especially if you spend a lot on credit cards.
When you make a payment once a month, you don’t know if the creditor reports your account to the credit bureaus before or after you make your payment. If it’s before, your balance will look inflated, which will bring your credit score down. Instead, make frequent payments and definitely pay off as much of the balance at once as you can.
Ask Your Credit Card Company for an Increase
Believe it or not, asking for a higher credit limit can increase your credit score, but only if you don’t use it. When you increase your credit limit, you decrease your credit utilization rate. This is the amount of credit that you have outstanding compared to your available balances. It’s a little trick that works, but you have to be responsible.
If you think you’ll use the available credit provided to you, don’t increase your credit line. If you can leave it untouched, though, it can help your credit score increase quickly.
Ask to be an Authorized User
If your parents or a sibling has great credit and has credit cards with low balances, ask if you can be an authorized user. Before you do so, though, find out what credit card companies they use. You should then contact those companies to see if they report authorized users to the credit bureau. If they do, the good credit habits could help your credit score.
Of course, this only works if your family member has good financial habits. If they continually max out their credit cards or make payments late, it won’t help your position. In that case, you’d be better off staying off the credit card.
Get Collections Off Your Credit Report
If you have collections on your credit report, they likely drag your credit score down. If you pay the collections, your credit score may be even more affected. It sounds crazy, but you restart the clock on the collection. If it’s from a long time ago, chances are it isn’t affecting your credit score ‘too much.’ If you pay it, you make it active again, which can drag your credit score down lower.
Instead, try negotiating with the collection agency to remove the collection from your credit report if you pay the balance. If you can pay the collection in full, you have the most bargaining power. If you can’t, make the payment and the removal of the collection from your credit report part of the negotiations.
These steps can help you increase your credit score quickly. No change will occur overnight no matter what you do, but these steps will help your credit score increase as quickly as possible. It’s best if you start these practices six months to one year before you apply for a mortgage to allow them time to help your credit score.