There is a lot of misinformation floating around about credit reports and credit scores – not only that, a large number of the clients we work with have never even seen their credit report or score before!
When our clients meet with us, we will go over the details of credit reports and also their own personal credit report with a fine-tooth comb, making sure they are fully aware of everything affecting their credit score and their credit bureau.
Keeping Your Credit Healthy
There are a number of ways that you can actively ensure that your credit score is kept high and in the best standings in order for you to get the best mortgage options.
It’s surprising to think about it, but your credit score goes up the more credit that is available to you. Think twice the next time you say no to an increase in your credit limit – it may just help increase your credit score.
It’s also important to note that most lenders want to see at least two credit facilities (credit card, line of credit, or loan) of at least $2,000 of limit each. If your credit card limit is $1,000, it may be time to increase your limit.
Pay Your Bills
Pay your credit cards and other debts on time – this includes bills like your cell phone or even parking tickets. Many clients don’t realize that unpaid tickets can affect your credit score drastically.
If a card or phone bill is late, then your score will automatically decrease. However, the longer you are away from a late payment, IE, the late payment happened a few months ago vs a current late payment, the better your credit score becomes. In other words, a late payment affects you more the more recent it has been.
Note: credit lates are only recorded as late if they are over 30 days late. So, a few days or a week will not hurt your credit score.
The longer you have a clean record of paying your credit card, loans, or other credit facilities, the better your credit becomes. So, a 40 year old with clean credit will have a much better score than a 25 year old who has only had a few years of credit history…
Keep a Low Balance
One of the least known ways to hurt your credit is to have high utilization. What this means is that if you use a high proportion of your available credit on a monthly basis, your credit score may decrease.
It is best practice to pay off your card every couple of weeks or you can increase your available credit so that you use a third or less of your available credit monthly.
It is not uncommon to forget about, or be late on your payments…
Late payments is the key contributor to a low credit score. Don’t panic! There are fixes and we’re here to help. Please don’t hesitate to ask us how we can improve your credit score.
We are here to help!! Give us a call and we’d be delighted to go over your credit score and help with solutions to improving it if needed.