3 Tips to Help You Improve Your Credit Score Fast

If buying a house is in your future plans, a good credit score can make a big difference to lenders looking at your mortgage application.

A high credit score means that you have a better chance of paying off your loan. A low credit score means that there is a higher chance you might default and not be able to pay back what you owe.

A lender will use your credit score to determine whether you are approved for the loan or not, the amount of the down payment required and the interest you’ll need to pay. Because of the importance lenders place on a credit score, it’s a good idea for you to be familiar with yours.

Here’s where to start

Fix Any Errors on Your Credit Report

There are three major credit bureaus where you can obtain your credit report and scores: TransUnion, Equifax, and Experian.   Each of them calculates scores slightly differently.

Great news

You are allowed one free credit report a year from each of them. When you request your credit report, you’ll receive a listing of your credit history.

You’ll want to check the accuracy of the report to make sure every listing on it belongs there.

Here’s the catch

Because it can take up to six months for any fixes to your credit report to impact your score, many homebuyers start checking their credit report early in the process.

 Here are some examples of errors you might notice on your report: 

•   You’ve never missed a payment, but your bank incorrectly reported you had.
•   You’ve settled a debt, but the resolution doesn’t show up on the report.
•   A credit card is not yours, but it is reported on your credit history.

Some of these errors will need to be reported to either your bank or credit card company and the credit bureau. Others, such as disputing a credit line that isn’t yours, must be challenged directly with the credit bureau.

This one seems easy, but it’s not.

Get Current on Your Credit Cards 

Recent regulations such as CECL have changed the way credit card companies and other lenders account for expected losses on debt, according to Visible Equity.

CECL is an acronym for Current Expected Credit Losses. It’s a new accounting standard that was developed due to the aftermath of the Great Recession of 2007 when the housing market crashed.

CECL is expected to change the way consumer credit applications are approved.

The not-so-good news is….

This means that mortgage applications may take longer to process under the stricter guidelines.

If you are seeking better terms on your mortgage, this is the time to get current on your credit cards and decrease your utilization ratio.

The most impactful item…

Get Any Collection Accounts Removed

Believe it or not, if you have settled or paid off a debt, you can take steps to get it removed from your credit report.

This should significantly improve your credit score. Again, this requires you to request a copy of your credit report and scrutinize it line by line to see what you can do with each item to improve your score.

It’s important to start early, because….

The process can take up to a few months to see any score improvement. If you know that you have items on your credit history that you can fix, it is recommended to start early.

Here’s the bottom line.

Taking out a mortgage for a house is a significant financial decision that will stay with you for decades. Investing some time to clean up your credit history can potentially save you thousands of dollars in interest and mortgage payments.

You should definitely take advantage of any opportunity to improve your credit score. 

Having a good credit score can be very beneficial when it comes to real estate. If you are interested in selling a property quickly in Cape Coral, Florida, Fort Myers, Lehigh Acres, Bonita Springs, North Fort Myers and surrounding areas, as one way to dramatically improve your credit score, contact Bourbon Street Homes today!

 

***For Informational Purposes Only.  Please Consult an Attorney or Credit Specialist for Individualized Recommendations.