A crucial step of purchasing a home is ensuring that you have good credit history. At Patterson State Bank, we suggest the following 6 tips to improve your credit score.
1. Request a copy of your credit report and make sure it is correct.
Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for loans -such as a mortgage. Everyone is entitled to receive a free copy of their credit report annually from each of the three credit reporting agencies, but you must go through the Federal Trade Commission’s website at www.annualcreditreport.com. You have the right to know what is in your credit report.
2. Set up automatic bill pay to ensure timely payments.
Payment history makes up 35 percent of your FICO credit score. The longer you pay your bills on time, the better your score. Avoid missed payments by setting up your bills to automatically. This can easily be done through our free Online Bill Pay system.
3. Keep balances low on credit cards and revolving credit.
Generating big balances can hurt your scores, regardless of whether you pay your bills in full each month. You can increase your scores by limiting your charges to 30 percent or less of a card’s limit.
4. Apply for and open new credit accounts only as needed.
Keep this in mind the next time a retailer offers you 10 percent off if you open an account. If you need a new line of credit, however, don’t jump at the first appealing offer. Contact us to find out current rates and fees on credit cards or discuss other options. Don’t feel pressured to get a credit card.
5. Don’t close old, paid off accounts.
According to FICO, closing accounts can never help your score and can, in fact, damage it. The older the account, the stronger your credit profile looks.
6. Get in the mix.
FICO scores consider the different types of credit accounts being used or reported, including credit cards, retail accounts, installment loans and mortgage loans. Credit mix will be more important if your credit report doesn’t have a lot of other information to base a FICO score on.