Boosting Your Credit Score

Boosting Your Credit ScoreCredit scores have become one of the most important numbers in the lives of Americans, yet many people don’t know enough about this number and how it affects their ability to get a mortgage, an acceptable interest rate on a credit card, and even a job. Your credit score follows you wherever you go, so it is important to make sure yours is the best it can be. Below are some helpful tips to increase your score. If you are considering obtaining a mortgage within the next 12 months, be sure to meet with your mortgage professional to advise you in this process.

Find and dispute mistakes on your credit reports. Order a free copy of your credit report from By law, the three major credit bureaus–ExperianEquifax, and TransUnion–must give you one free copy per year. Then, dispute any errors. Errors are not uncommon.
Pay on time and bring past-due accounts current. If you have past-due accounts on your credit reports, pay them now and then keep your accounts current. Your credit score is penalized for any accounts carrying a past due balance. And pay all your bills on time, all the time.

Rehab your student loans. Defaulted student loans hurt your credit scores. If you haven’t been paying your student loans on time, contact the lenders. Federal student loans are eligible for payment plans.
Before paying off old debts, contact your mortgage professional. Depending on your scenario, you may be better off paying the collection after closing on your new mortgage rather than prior to your purchase. The credit scoring modules will factor paying off the collection as new activity and reduce your score as if the collection were currently “active.”

Keep your balances below 30% to 50% of their credit limit. Review your credit report to see which accounts are over 30% to 50% of the available credit line. For example, if you have a credit card with a $1,000 credit limit, and the balance is $550, pay down the account to where the balance stays no more than $300 to $500.
Note: If you’re trying to reduce your credit debts, you should use a different strategy than maximizing your credit scores.

Apply for different types of credit, but not right before you try to buy a house. If you have two paid-on time credit cards and no other loans, you would expect to have good credit. That is not necessarily the case. The different types of credit you have make up to 10% of your score, and lenders prefer to see that you can handle loans that are revolving (e.g., credit cards) and installment (e.g., mortgage or car loan). Avoid obtaining new credit close to when you want to move. A new car, for example, will not only dramatically impact what you can qualify for, but it will also zap your credit scores as a new maxed-out debt.

Don’t close accounts in good standing. The length of credit history makes up 15% of a credit score. Closing old accounts will shorten your credit history and hurt your scores. If a card has no annual fee, keep it open.
Use an old credit card. Credit card companies often stop reporting your account if you no longer use the card. Dust it off, use it to make a few small purchases, and the creditor will start reporting again. Doing so increases your available credit limit and your credit history length, since the old card is showing as active again.

The Steller Group has served real estate clients with all levels of credit scores. With the appropriate steps and some patience, credit scores can be restored. If you are in need of a mortgage professional to advise you in your own credit repair process, email or call us at 720.593.9355 and we will provide you with qualified, pre-screened referrals.

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