Many people make New Year’s resolutions. Did you? Some of the most popular ones focus on health, mindfulness, and finances. If “buying a new Jersey Shore home” is on your list, then let’s talk money. You need to save up for your down payment and closing costs. And you’re going to need to make sure that your credit is up to snuff. That may take a little time. Here are a few ways you can boost your credit score relatively quickly.
How to Boost Your Credit Score
Check Your Credit Report
First, you need to know your score. The three credit reporting agencies are Experian, TransUnion, and Equifax. Since creditors do not always report your information to each agency, your credit score may vary. Lenders use the middle of these three scores when considering the terms of your loan (and creditworthiness). For example, Experian shows your score at 640, TransUnion shows 660, and Equifax shows 675. Lenders throw out the 640 and 675 and use 660 for your score. That is considered in the “fair” range. But 675 moves you up to the “good” category. And that gets you a better rate than “fair”. In fact, the higher your score, the better your interest rate. It also opens you up to a wider variety of loan programs.
Visit AnnualCreditReport.com for a free copy of your credit report from each of the three agencies. Legally, you are allowed one free report per agency every 12 months. Once you receive your copy, examine it for errors. If you find an error, visit the website of the agency showing the error. Each agency utilizes its own method of reporting erroneous information. Make sure you have proof for your dispute. Do this as soon as possible because these things may take a little time.
Pay Down/Pay Off
One of the quickest ways to boost your credit score is to pay down your credit card balances. Each revolving credit account needs to be no higher than 30% of the account’s limit. For example, if your credit card has a $10,000 limit, your balance should not exceed $3000. However, ironically, paying these cards off completely could hurt you. Instead, use the cards regularly (yet sparingly) each month, keep the balances low, and pay them on time. This shows that you use your credit responsibly. Lenders like to see that, too.
What you do need to pay off, though, are collection accounts. These drag down scores, too. But paying off the really old collection accounts may not be worth it. Talk to your lender to see which ones you should pay off and which ones can be left alone. Also, make sure you pay the original creditor not the collection agency if you wish to see a positive effect on your FICO score quickly. And make sure that the creditor sends you proof of payment to settle the debt. You may need to provide this to the reporting agency so to update your account.
Sign Up for Autopay
Late payments ding your credit, too. In fact, your payment history makes up about 35% of your credit score. Never miss another payment due date again. Most banks and credit unions as well as some creditors allow you to set up automatic payments. Sometimes, creditors even give you a discount when you sign up for autopay. So, it’s well worth your time to check it out.
Try Experian Boost
Finally, don’t have much (or any) established traditional credit? Try Experian Boost. This service considers utility, rent, and even streaming service payment history to adjust your score upwards. Not all scores are “boosted” this way. But it doesn’t hurt to try. And it’s absolutely free!
Sherri Lilienfeld, eXp Realty, Your Source for Jersey Shore Real Estate