4 Effective Ways To Raise Your Credit Score This Year
When planning to buy a home, many people try not to think about their credit history. Most of them hope that mortgage is an easy game to play. However, a low credit score can do you a bad service, especially when it comes to buying a house.
We’ve all had our share of bad calls, maxed our credit cards, missed payments, etc. They all seem to catch up with us when we are about to make a truly important decision – buy a dream home.
Before you give up on your dream, consider these ways to raise your credit score as fast as possible. If you follow this advice, you may become a happy homeowner in under a year.
Increase Your Credit Utilization Ratio
A credit utilization ratio (CUR) is the comparison of the credit you’ve used to the credit you have available. Your credit history contains CUR for each of your cards as well as for all of them together. The higher your CUR is, the lower your score falls. The CUR makes up about 35% of your credit score. Try to keep your overall CUR to under 30% or lower.
A simple way to up your CUR is to apply for a credit limit increase. Many credit cards offer such increases every once in a while but many people ignore them. By raising your limit, you can improve the overall and individual CUR. You can also apply for another card to increase your available credit and decrease the CUR.
Make Payments Twice A Month
When you incur substantial expenses, such as car repair or buying new appliances, it can temporarily lower your score. If you have the money to pay off the purchase before the month is over, divide it into two payments.
Try not to use your credit card if you can’t pay the balance off by the end of the month. If you need to make a big purchase, consider taking a loan. Otherwise, the compound interest will build up quickly and you may be overpaying.
Pay On Time (Their Time)
Have you been making all the payments on time but your credit score is still low? You may be the victim of a date mix-up. Paying the debt before the due date doesn’t always mean you you’ve paid it on time. Here is the trick. Your card issuer may be sending your balance to the credit bureau BEFORE the due date. This way the bureau gets the wrong idea about your payments. What you can do is call the card issuer and find out when the reporting date is. Make sure to make the payments beforehand.
Remove Your Late Payment
Did you make just one little mistake and paid late? Such tiny blunder can cost you about a 100 credit score points. Just one 30-day late payment can decrease your nice 700 credit score by 80 points. If you make a 90-day late payment, the number can drop to 610. The lowered rate stays with you for one year (in the case of a 30-day late payment) and for two years (in case of a 90-day payment).
Meanwhile, you can fix the problem by removing the late payment. You can contact the original creditor and request a goodwill adjustment. In case they say no, you can try to persuade them by promising to set up auto-payments. Removing a late payment isn’t easy so be ready for a fight. The results are worth the time you spend on negotiations.