You know you need a good credit score to get favorable terms on your mortgage, but how do you do it? Most changes to your credit score take many months to take effect. Luckily, there are a few tips you can use to boost your credit score quicker.
Keep reading to see how you can get your credit score higher today.
Decrease Your Credit Utilization
One of the first things you should focus on is your credit utilization. This is the comparison of your outstanding revolving debt to your total credit balances. A good rule of thumb is to keep your credit utilization rate at or below 30%. This means that no more than 30% of your total credit balances should be outstanding.
Here’s an example:
You have three credit cards each with a $1,000 credit limit. One credit card has a $250 balance, one has a $500 balance, and the other a $750 balance. Your total outstanding revolving debt is $1,500 and your total available balance is $3,000. That means your credit utilization rate is well above the 30% threshold. This could hurt your credit score more than you realize.
Your credit utilization rate makes up 30% of your credit score. That’s a big percentage. If you are able to keep your credit utilization rate within the parameters spoke about above, you will have a better chance of your credit score improving quickly.
Typically, as soon as you pay your credit card balances down and your credit card companies report it to the credit bureaus, your credit score will improve.
Get Rid of Incorrect Information
If you don’t check your credit report often, you may not know if there is incorrect information reporting on it. You have access to one free credit report from each of the three credit bureaus every year. This means you could potentially check your credit reports for accuracy up to three times per year. We recommend that you take advantage of this.
As you go through your credit report, you’ll see the information reported. If there are accounts that don’t belong to you on there, get to the bottom of the issue right away. You may have been a victim of identity theft or there could have been an honest mistake. Either way, get in touch with the credit bureau and the reporting credit card company to eliminate the account from your credit report. It’s best if you do this in writing.
If there is other incorrect information on your credit report, such as a late payment you didn’t make late or a missed payment that you know you made, you’ll have to write to the credit bureaus for this too. In this case, you’ll need to provide evidence to the credit bureau why the information is incorrect. Any time you write to the credit bureau, they must investigate and respond to your request within 30 days with their findings. If they miss this deadline, the account must drop from your credit report according to the law. Any incorrect information that you have corrected can help increase your credit score quickly.
Get Payment Arrangements
If you have bad debt on your credit report, you can get ahead by arranging a payment arrangement with your creditor. The payment arrangement should then be reported to the credit bureaus. This way they know that you are paying your debt down and on time. Rather than showing that you have a late payment, the credit bureaus and potential lenders will see that you are making good on your debt.
While this method won’t increase your credit score overnight, it will help your credit score increase slightly right away since the negative information won’t be on your credit report any longer. Of course, this only works if you stay on time with your payment arrangements.
Become an Authorized User
The final step you can use to increase your credit score quickly is to become an authorized user on a family member’s account. This only works if the credit card company reports the authorized user to the credit bureaus, though.
You should only become an authorized user on a family member’s account that uses their credit card and pays the bill on time. You don’t want a large balance reporting in your name, as that will upset your utilization rate. But if you have a family member that uses their credit card and pays it off each month, the positive credit information can help your credit score.
Improving your credit score doesn’t happen overnight, but it can happen quickly using any of the steps above. You can use one or multiple steps to help your credit score increase that much faster when you want to get a mortgage.