Home-Buddies

Get the Keys to Drive up your Credit Score

The following is a guide to help you build up your credit score. This guide is for information only. Everyone’s credit history is different, so all actions pertaining to your credit and credit report will have different results/effects for each individual.

1. The most important tip about improving your credit score is don’t remove all the derogatory remarks off of your credit report too quickly. It may cause your credit score to GO DOWN.
2. Correct any mistakes that are showing up in your report. Be sure that the information being reported for each of your accounts is accurate. This does include the account number, dates of late payments, credit limits, age of accounts, etc. You don’t want to claim that “this isn’t mine” (unless of course you have discovered fraud/identity theft). You just need to dispute things about your accounts that have been reported incorrectly. Find the inconsistencies within the three credit bureau reports.
3. Get duplicate data removed. Perhaps an original creditor/lender sold your loan. Now it looks like you have several more loans out there than you really do, because it shows the original lender and the new lender!
4. Make sure that your creditors/lenders are reporting your credit. You need to show a history of credit.
5. Your credit limits must be showing on your credit reports. Your credit limits are part of the debt-to-credit limit ratio formula. This is one of the prime keys that makes up 30% of your credit score.
6. No late payments. Please pay your bills on time. If you have very recent late payment activity, it is very likely to lower your score compared to a late payment that you had over 2 years ago.
7. Pay attention to ‘date of last activity’. Remember, new actions carry more weight than older transactions. If you have finally just now paid off that 3 year old debt, then it is now reported as a new activity, whereas, it was previously an old item that was not affecting your score. But now that it has become a new item of activity on your report, it has just become a new collection. You don’t want this to be your end result. You can ask your creditor not to update the date for this old debt.
8. Keep your balances low and try to pay down those high balances. A good target range is to keep your balances around 25% - 30% of your credit limit. Remember that the score is measured on each individual credit balance as well as the total debt balance.
9. Don’t automatically close out old accounts. This takes away from some of your credit history. It affects the debt-to-credit limit ratio as well.
10. Don’t have too many open credit lines early. Make sure you have a good credit mix of account types as well. Revolving, Installment, and Open.
11. Don’t apply for credit too often. Too many inquiries upon your credit report will lower your score. Be selective with your timeframe. A ‘hard’ inquiry can stay on your report for up to 2 years.
12. Contest/Dispute those unauthorized hard inquiries.
13. If you have a home equity line of credit (HELOC) try to pay it down!
14. Ask for ‘credit re-scoring’ when applying for a mortgage with a lender. This can sometimes be a quick way to deal with tax liens or collections that have shown up as unpaid, and are in error. Be sure that you have some documents for proof.
15. Become an authorized user on someone else’s credit account. (Of course be sure that they are in good credit standing themselves with this account!) This account will be included in YOUR credit score on your credit report.
16. Have as few addresses as possible. Too many addresses may imply instability.

Good luck.

Barbara Partaka

Home Buddies