How To Boost Your Credit Score

With the average price of homes falling all over the country, new opportunities are developing for people to become homeowners. However, it can be a problem for those who have less than perfect credit. Most mortgage companies will offer the best rates to those with credit scores around 750, with limited approvals to those in the 600 range. Although home loans are still available to those with less than perfect credit, they will not be offered the best rates when it comes to financing a new home.

Because new opportunities are available for individuals to become homeowners, there is no better time to work on boosting your credit score than now. There are many ways to boost your credit score without having to use an agency, since most credit card and other accounts actually report to the major credit bureaus on a monthly basis.

The first step in boosting your credit is paying off high balance accounts, such as credit cards or personal loans. One factor that can affect a credit score is the available credit ratio, which is decided by how much approved credit there is in relation to how much is still an outstanding balance. It is best to try and pay at least half of everything off as soon as possible, since maxed out credit cards will only have a negative affect on a credit score.

One of the best ways to manage credit card debt is by paying off accounts with high interest rates, since this is the easiest way to save money. Depending on the balance of the account, interest fees ranging anywhere between twenty and a few hundred dollars could be charged on the account each month. By focusing on the larger accounts with high interest rates first, it will be easier to pay off the debt faster and boost your credit score.

If you have any accounts that have gone to collections because of late payments or over limit charges, you should focus on those first since accounts that have gone to collections are usually several months overdue. Payment history and making monthly payments on time is one of the most important factors taken into consideration by credit bureaus, so it is important to resolve any late issues to boost your credit score.

Even if you feel in a bind and have maxed out all of your credit card accounts, it is important to avoid opening any new accounts unless absolutely necessary. Each time a bank submits a report to check your credit score, a negative mark can result. Also, new accounts will bring down a score since a payment history has not yet been developed, so it is best to avoiding opening any new credit accounts while trying to boost your score.

Closing accounts is also not recommended, even if it is a card or account that is not used very often. Older accounts that are in good standing can have a very positive impact on your score, so closing them would actually make your score go down. You can consider closing accounts if you have several different credit card accounts, but should focus on closing newer accounts rather than those you have already established a payment history with.

Staying in the credit industry is important when trying to boost your credit score, so not using your credit cards after paying them off is not the best idea. Instead, you should choose a couple of credit cards to use on a few occasions, to charge smaller items like meals or trips to the store. Let the balance sit on the card for at least a month, but don’t forget to make the minimum monthly payment. Once you have allowed interest to accumulate for at least one month, you can pay off the entire card to avoid paying any additional fees. By still having activity on your cards but keeping the balances low, you will have nothing but positive feedback from your credit card companies which they will pass on to the major credit bureaus.

It is really important to have a good credit score, in order to avoid high interest rates and having to pay a great deal of money. Each individual’s credit score is looked at when applying for a loan or credit card, or even when entering into a lease to rent a home. Boosting your credit is important especially during times where house prices are falling, and boosting your credit score can be easily done in only a few months.

-Melisa

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