Ways you can Improve your Credit Score What
Did you know your credit score can be the difference between you getting a good home loan and getting stuck with higher monthly payments cause of high interest rates. Lenders are tightening their standards now and it is even more important that you improve your credit score as much as you can so you don't get caught with them high interest rates. There are actually 3 FICO scores computed by data provided by each of the three major credit bureaus which are Experian, Trans Union and Equifax. Some lenders will look at one of these three scores, while other lenders may use the middle score of the 3.
Most applying for a mortgage the lenders look at your FICO score. You may be asking what this score takes into account. The following is taken into account when they calculate nyour credit score your payment history, which makes up the biggest chunk of your score, looks at how often you pay your bills on time. The amount of debt you owe is considered equally important. The amount of time you've had your credit cards and how much new credit you apply for all play a role in determining your score.
- Pay your bills on time. Late payments and collections can have a serious impact on your score.
- Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
- Reduce your credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
- If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
What you should aim for is a credit score in the 700s to get you more favorable loan terms. The best way to improve your credit score in the short term is to pay off the high balances on your credit card - that can raise your FICO score 60 to 70 points overnight, says Craig Watts of Fair Isaac.
As we mentioned, your FICO score looks at how long you've managed your credit. So the longer you've managed your credit wisely, the better your score. If, for example, you have a card that is at least 5 or 6 years old, it's not a good idea to close those accounts so it shows you know how to handle your credit.
What if there is an error on my credit report? If you see an error on your report, report it to the credit bureau. The three major bureaus in the U.S., Equifax (1-800-685-1111), Trans Union (1-800-916-8800) and Experian (1-888-397-3742) all have procedures for correcting information promptly. Alternatively, your mortgage company may help you correct this problem as well.
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