Most people dream of owning a house one day. In order to qualify for a conventional mortgage, you’re required to have a minimum credit score of 620. However, that’s not good enough to get the best rates. Fortunately, there are steps you can take to quickly raise your FICO score by 100 points.
Order your free credit reports
The information on your credit reports determines whether you’ll be approved for a new loan and the interest rates you’ll receive. Therefore, it’s important to know what’s on them. Lucky for you, getting free copies of your credit reports is fairly easy. Just go to AnnualCreditReport.com and submit a request. You won’t find your FICO score on there, but many credit card companies provide that information on your monthly statement. If yours doesn’t, you can always buy your score from the credit reporting agencies.
Review each one for mistakes
Don’t automatically assume the information on your credit reports is correct. Studies show that mistakes are more common than you think and some of them can hurt your score. Once you have your reports handy, comb through them line-by-line for inaccuracies. Look out for fraudulent accounts, outdated information, wrong name or addresses and things of that nature. If you’re recently divorced, make sure your former spouse’s accounts aren’t listed on your report.
Dispute any inaccuracies you uncover
Once you catch a mistake obviously the next step is to get it fixed. You can do so by initiating a dispute online with all three credit bureaus; Equifax, TransUnion and Experian. Identify all the items you think are incorrect, explain your position and provide copies of any supporting documents. Be sure to tell them that you’d like to have the items deleted or corrected. The credit bureaus will investigate your claims and give you a response within 30 days.
Additionally, you’ll need to reach out to the creditor and let them know you’re disputing the information they provided. Don’t forget to include copies of anything that supports your position.
Apply for a secured credit card
Secured credit cards are a great option for people trying to rebuild their credit. No matter how bad your FICO score is you’re still likely to be approved. Credit card issuers don’t mind taking the risk because secured cards require you to make a security deposit. The amount you deposit usually ends up being your credit limit. You can use the card online and in-stores just like a traditional card. Every month your account activity will be reported to the credit bureaus. Practice good habits and you’ll see your score rise over time. However, not everything is sunshine and rainbows when it comes to secured cards. Most of them come with an annual fee and a higher APR than an unsecured credit card.
Keep your credit card balance as low as possible
Many people are guilty of buying things they don’t need. There are numerous reasons why this happens, maybe they had a crappy day, saw a sale or YouTube made them buy it. Fall into the trap often enough and you’ll find yourself with a maxed-out credit card. A big part of your FICO score is based on how much of your available credit you actually use. So, exercise some willpower and keep your purchases to a minimum.
Pay off your balance before the due date
Rumor has it that carrying a balance month to month is the best way to build credit. Survey says, that’s a lie. If you want excellent credit, you’re going to need to pay your total balance on time every month. Do whatever it takes to avoid missing the deadline. This may mean making multiple payments throughout the month or setting up auto-pay.
