Homebuying education For homebuyers

Top tips for boosting your credit score

Ben Herold
Ben Herold
two would be first time homebuyers look. at a laptop as they read about tips to boost their credit scores

Credit scores are a crucial factor that lenders and other financial institutions use to determine creditworthiness. When planning to buy a home or a vehicle, or applying for a credit card, a higher credit score often secures better terms and interest rates. For those aiming to improve their credit score, here are some tips.

  1. Check each credit report regularly

First time homebuyers should start by obtaining a copy of their credit report from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Each individual is entitled to one free copy from each bureau annually. Reports should be reviewed for any errors, inaccuracies, or unauthorized accounts. Disputing and correcting errors can potentially give the score a quick boost.

  1. Pay all bills on time

Consistently paying bills on time is one of the most significant factors that contribute to an individual’s credit score. Set up reminders or automatic payments to ensure due dates are never missed. Late payments can have a negative impact on a score, so make punctual payments a top priority.

  1. Reduce any credit card balances

A high credit card balance relative to its credit limit can negatively affect the credit utilization ratio. Aim to keep credit utilization below 30% of a credit limit. If possible, work on paying down credit card balances to improve the score over time.

  1. Avoid opening too many new accounts

When applying for credit, a hard inquiry is usually recorded on the credit report. Too many inquiries within a short period can lower the score. Be strategic about applying for new credit accounts and only open those that are genuinely needed.

5. Consider keeping old accounts open

The length of credit history matters. Even if a credit card or account is not frequently used, keeping it open can help increase the average age of credit accounts, which is a positive factor for the overall credit score.

  1. Work on building a positive payment history

If there is a history of missed payments, focus should be on building a positive payment history moving forward. Over time, consistent on-time payments will outweigh the impact of past delinquencies.

  1. Use credit responsibly

Responsible credit use involves borrowing only what you can afford to repay. Avoid maxing out credit cards or taking on too much debt, as it can lead to financial strain and negatively impact credit scores.

  1. Be patient and persistent

Improving a credit score takes time and consistent effort. With responsible financial habits and a bit of patience, individuals can gradually boost their credit score and enjoy the benefits of improved financial opportunities.

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