Are you looking to buy a home, but your credit score is holding you back? If so, you’re not alone. Many people find themselves in a similar situation, but fortunately, there are steps you can take to increase your credit score quickly and make your dream of homeownership a reality.
The first thing you need to do is to understand what factors affect your credit score. Your credit score is a three-digit number that ranges from 300 to 850 and is based on your credit history. The factors that affect your credit score include your payment history, the amounts owed on your credit accounts, the length of your credit history, the types of credit you have, and the number of new credit inquiries.
To increase your credit score quickly, you need to focus on the factors that have the most significant impact on your score. Here are some tips to help you do just that:
- Check Your Credit Report The first step in improving your credit score is to check your credit report for errors. You can request a free credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once per year. Look for any errors, such as incorrect balances or accounts that don’t belong to you, and dispute them with the credit reporting agencies.
- Pay Your Bills On Time Your payment history is the most critical factor in determining your credit score. Late payments can have a significant impact on your score, so make sure you pay your bills on time. Set up automatic payments or reminders to help you stay on top of your bills.
- Reduce Your Credit Card Balances The amounts owed on your credit accounts make up 30% of your credit score. If you have high balances on your credit cards, it can hurt your score. Try to pay down your balances as much as possible, or consider transferring balances to a lower interest rate card.
- Keep Old Credit Cards Open The length of your credit history makes up 15% of your credit score. Closing old credit card accounts can shorten your credit history, which can hurt your score. Instead, keep your old credit cards open and use them occasionally to keep the accounts active.
- Limit New Credit Inquiries Each time you apply for credit, it can result in a reduction to your credit score.
- Pay off high credit card balances. One of the most important factors that determine your credit score is your credit utilization rate. This is the percentage of your available credit that you are using. To improve your credit score, you should aim to keep your credit utilization rate below 30%. If you have high credit card balances, paying them off can quickly improve your credit utilization rate and boost your credit score.
- Becoming an authorized user on someone else’s credit card can help you improve your credit score. When you are an authorized user, the credit card company reports the account activity to the credit bureaus, which can positively impact your credit score. However, it’s important to choose a credit card with a good payment history and low balances to avoid any negative impact on your score.
These are only but a few methods the team at MiddleCreditScore.com follows when helping its clients increase their middle credit score, enabling consumers to qualify for the home they have their eyes and hearts set on purchasing. We provided the logical steps for making the strides to the credit score that will equate in the ability of clients all sharing in the American Dream of home ownership.