Your credit score and credit history are important factors that will determine how lenders will approve you for a new mortgage. It is important that you have the best credit rating as possible. I recently learned 5 ways that has helped lots of people raise their credit score. The best way to earn and keep a high score is to pay debts (on credit cards and car or student loans, for instance) on time. These five additional tips can help you gain or maintain solid credit.
Low credit scores mean high loan repayments
Many Americans are not aware of how a low credit score can hit their pocketbook. The survey cites the impact of an auto loan. Only 20% of Americans know that low credit scores are likely to increase the finance charges on a $20,000, 60-month car loan by more than $5,000, up from 16% a year ago, according to the results of a survey by 1,000 people carried out for the CFA and VantageScore Solutions, which operates a credit score model. And 41% incorrectly think extra charges would be less than $3,000.
There is more than one credit score to track
One-third of people don’t realize that they have more than one credit score. The country’s three main credit bureaus — Experian, Equifax, and TransUnion — collect the information on which credit scores are frequently based. This is particularly important as some lenders may be unwilling to accept just one credit score, if they suspect that it doesn’t represent the full picture. And scores can vary. Last year, Fair Isaac Corp. (FICO) announced a change in its scoring, putting less focus on medical-related debts.
700 is the magic number for most borrowers
Some 14% of respondents don’t realize that 700 is actually a good credit score. A score between 661 to 780 is considered good credit and between 781 and 850 is regarded as excellent credit, according to financial website Credit.com. The site rates fair credit as between 601 and 660, poor credit between 501 and 600 and bad credit as anything below 500. But different lenders may have different criteria when it comes to loaning money, and may approve borrowers with a credit score of below 700.
Transferring balances won’t help your score
Only 34% of people know that making payments on time, keeping credit card balances low or paid off, and not opening several card accounts at the same time helps raise a low credit score or maintain a high one. It may not always be wise to open another card with a lower temporary interest rate and transfer the balance from one credit card to the new card. Brobeck advises paying down debt rather than just moving it around, as well as not opening many new accounts at the same time.
Check your score regularly to avoid disappointment
While most people realize that it’s important to check their credit scores with one of the three main credit bureaus, 18% of people are still not aware that they should do that, the survey found. It’s free to check your credit score and it also helps to build a credit score over time. Rather than wait until you need a loan in an emergency or until you want to get a mortgage, it’s important to check your score regularly so you can detect any identity fraud on a credit card or any mistakes by the credit bureau. Full Story
Having a solid credit score will not only help with your home purchase but it will help your overall credit power as a whole. it is important to work on getting your credit score as high as possible if you ever want to have a good chance at getting an affordable mortgage loan. Use the tips you just learned above to help you increase your credit score and better your chances of purchasing the house of your dream.