4 Tips & Tricks to Boost your Credit Score
When it comes to buying a house, your credit score can play a big role in making your dream a reality. Your credit score is like your financial reputation, and it shows lenders how responsible you are with your money. Lenders look at your credit score to decide whether or not to give you a mortgage. If you have a high credit score, they'll be more likely to give you a mortgage and a lower interest rate. But if your score is lower, they might think you're too much of a wild card and make it harder for you to get a loan.
Before finding ways to boost your credit score, take a moment to understand where your credit score currently stands.
Source: experian.com
1. Lower Your Credit Utilization
Credit Utilization rate, which is also referred to as credit utilization ratio, describes how much of your available credit is being used. Lower credit utilization ratios show lenders that you are managing your credit responsibly and are not relying too heavily on borrowed funds. Accounting for 30% of the total credit score, it is important to keep track of credit utilization. To find credit utilization, it can be calculated by dividing the available credit limit by the credit card debt.
Keeping your credit utilization below 30% will boost your credit score. The best way to lower it is by paying off your credit card balance, but you can try requesting a credit limit increase from your credit card company.
2. Request a Goodwill Donation
This tip helps those that have a missed or late payment and a relatively good standing the most. If you believe that the missed or late payment is hurting your credit score, you can write a goodwill letter to that creditor, requesting the negative mark to be removed.
For more information about goodwill letters, including how to write them, when to use them, and examples of goodwill letters, visit this website, https://www.creditkarma.com/advice/i/goodwill-letter, written by Emily Starbuck Gerson
3. Correct Credit Report Mistakes
Errors on your credit report, such as a falsely reported late payment or incorrect balance, can negatively impact your credit score. Even small errors, such as typos in your name or an outdated address can negatively affect your credit score because it makes it more difficult for lenders to verify your identity.
4. Use a Credit Boost service
Credit boost services are companies or organizations that help you build credit. When finding a credit boost service, it is important to carefully research the company or organization to ensure you do not fall into scams that hurt your credit score. Oftentimes, checking their reputation and track record of success help to verify legitimate credit boost services.
There are many of different services. Some help to dispute negative information, such as requesting goodwill donations and disputing with negative information. Other services may add positive information to your report, such as Experian Boost. Experian Boost allows you to build credit based on your monthly subscription bills. This includes services, such as Netflix, internet and utilities.
Written with information from Buffini & Company