Seven Ways to Improve Your Credit Score

Credit scores, along with your overall income, debt and assets are a big factor in determining if you’ll qualify for a loan and what loan terms you’ll be able to qualify for.

1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.  Errors can take months to correct, so check your credit report before even considering to purchase a home.

2. Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.

3. Don’t charge your credit cards to the maximum limit.

4. Don’t purchase big-ticket items for your new home on credit cards until after you have closed on your new home. The amounts will add to your debt.

5. Don’t open new credit card accounts before applying for a mortgage. Having new accounts and new credit checks can lower the score as well as increase your debt-to-income ratio.

6. Do not close any existing accounts with a good payment history.  The credit bureau wants to see a long-term history of open accounts, even if the balance is zero.

7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.