New Year’s Resolution: Improve Your Credit Score In Summerlin

New Year’s Resolution: Improve Your Credit Score In Summerlin

This year instead of getting that gym membership or cleaning out the garage, how about a resolution for the whole year? Improve that credit score and open your options for better mortgage rates, lower down payments and more!

OK, so it will probably take more than just one year to improve a poor credit score, but it really is possible to enhance your Vantage or FICO credit score with a few key steps. No matter what type of home loan you want, your credit score will matter. The last several years of good and bad financial decisions go into that score, not just your present situation, so you need to keep these up to get it moving the right direction.

Paying Small Bills First

It’s easy to ignore the little bills like that library fine from three years ago or last year’s dental bill that’s now in collections, but these unpaid bills hurt both types of credit scores. Once you pay them off, Vantage stops counting them against you, which can improve your score will minimal effort.

Combining and Paying Off Small Debt

Having a variety of credit cards can help you up to a point, but if you have a bunch of small balances all at once, each one dings your credit separately. For best results, keep those paid off and just use your lowest interest card for regular purchases. That gives you the added benefit of improving your debt ratio (the amount of debt relative to the available credit you have).

Keeping Your Paid Off Credit Lines Open

Debt can affect your credit score in two ways: outstanding debt is bad and negatively affects your score while paid-off debt helps your credit score. Old unpaid debts usually fall off your credit report after seven years, though sometimes this varies depending on the particular debt type. You can keep paid-off credit lines open though, and if you don’t use them (cut up that credit card this time), they only increase your “available credit” rating, which boosts your score.

Paying Before Your Due Date

Your credit score has a lot of math going on, but basically, it’s the ratio of how much available credit you have in total to how much you are using at this particular time. Since your creditors report your monthly balances to the credit bureaus, you can create an increase just by paying your balance off early. That way when your statement processes, you have a lower balance or even a zero balance, which shows that you paid it down. If you wait and pay with your statement, it will already have been reported.

 Improving your credit score is a long-term process. Overall, the best way to improve is to maximize your payments and reduce your overall outstanding debt. But keeping these four rules in mind can give you that extra boost to help you get approved for the loan you want. Interested in getting pre-approval for a mortgage loan? Please reach out to me for my lender recommendation!