One thing we get asked about a lot by prospective home buyers is the importance of a good credit score. Having a good credit score is the starting point of getting a home because you want to take care of your financing first before anything else. Your credit history is a compilation of all the pieces of your financial history. It includes every credit card you have ever opened, all your debt, loans and debt repayment history. Other information that impacts your credit score includes whether you’ve payed back credit card companies on time, filed bankruptcy, if a court has ordered you to pay a loan, or a debt has been deemed noncollectable. All of this information stays on your credit history and affects your score. If you have had money problems, or have failed to pay back loans in the past, you are a greater risk to a lender and more likely to be denied a loan. If you have bad credit, or are just starting to build it up, here are 5 simple things you can do to improve your score.
1. Start small
One small card or loan can get the ball rolling for you and start building your credit score.
2. Pay off your charges in full at the end of the month
By doing this, you demonstrate to lenders that you are fiscally responsible and less of a risk in giving a loan to.
3. Make your payments on time
This is one of the most important things you can do. By paying on time, you are showing the lender that you are disciplined and responsible enough to make payments on time.
4. Keep your total charges within their credit limit
This is another demonstration of fiscal responsibility that will prevent you from overspending on your limit.
5. Regularly read your credit report
One way to build a positive history is to make sure you know what information is being reported. We recommend you to visit the free, online service AnnualCreditReport.com once a year
so you can see how your credit score is being rated by the 3 big credit reporting agencies, Experian, Equifax,