Purchasing a home is always an exciting time for both first-timers and veterans alike. But for first timers, the thought of their credit score tends to worry them more. Like it or not, your credit score (sometimes referred to as your FICO score) dictates a lot. Whether you’re seeking approval for a credit card or trying to get a reasonable rate on a mortgage. Boosting your credit score is not something that happens overnight. But with a few easy and straightforward tricks you can get those digits up reasonably fast.

The importance of good credit

If you’re looking to become a homeowner but in need of financing your credit score will make or break your loan application. These days you’ll need a minimum credit score of at least 580 if applying for an FHA home loan. But poor credit, even when it meets the minimum requirements, will mean higher interest rates.
A score of over 700 is considered good while one over 800 is seen as excellent. If your three digits don’t break 700, then you’re not alone. The national average is 695 with less than half falling in the favored 700-plus range. FICO scores are based on an algorithm with the numbers going up and down based on the numbers crunched. The good news is that you can bring those numbers and your credit score up. Here are six ways you can do so.

1. Find and address credit card errors

In some cases, it’s not your fault if your credit score is low. Creditors sometimes make mistakes in their reports, at least one in four according to the Federal Trade Commission. Before doing anything else, request a report from each of the three nationwide credit reporting companies (Equifax, Experian, TransUnion) at Annual Credit Report. By law, you’re entitled to one free report a year. If you find anything unusual – say, a falsely reported late payment or unpaid bill – the report should tell you where to send the dispute. Once the error is corrected, you should see an immediate boost in your credit score.

2. Have activity on your credit report every month

Having no credit history is just as bad as having a low FICO score. With 35% of your score based on payment history, it is vital that you have a paper trail. The cheapest and easiest way to build and maintain your score is through the use of a credit card. This doesn’t mean you need to make large purchases on a regular basis. Just one or two purchases by card a month (it can be as little as a loaf of bread). Then make sure you pay the statement balance in full and on time every month.

3. Keep your utilization low

Your credit score depends not just on what you owe but on what you owe compared with your credit limit, a ratio known as credit utilization. For example, if you have a $4,000 balance on your card with an $8,000 limit, your credit utilization is 50 percent. There are a few theories on what the best credit utilization level is, but most agree that it should be no more than 30 percent. A card that is continually being maxed out is a red light for either a lack of control or financial hardship.

4. Get your bills current

You typically have 30 days to make a payment so If you’re running late on one try to get it paid ASAP. Even if you’ve already passed that mark the sooner, you pay it; the less damage is done. If you’ve had a bad run of missing payments in previous months, you can fix the damage by immediately switching to paying all bills on time. After 2-3 months you should see an improvement in your credit score.

5. Become an authorized user

Do you know someone you trust completely and is good at managing money? If so, and they’re willing to let you become an authorized user, then their account will show up on your credit report. As a result, your credit score gets a boost from their on-time payments and (hopefully great) credit utilization rate. Just make sure you choose someone who do pay their bills on time and keeps a low debt. Bad credit history will show up just as much as good.

6. Remove bad credit reports

As with a lot of things, there’s always room for negotiation. Creditors don’t like unpaid bills anymore then you do. You have the option of getting your lousy behavior removed from your credit report by presenting them with a “pay for delete offer” in exchange for making the full payments. If it’s not possible for you to make the total payments now, negotiating for installment payments in another option.
These six strategies may be straightforward but keep in mind that ‘fast’ is a relative term. Rome wasn’t built in a day nor was it destroyed overnight. Give it a good 2-3 months before you start seeing results.

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