Do you know your current FICO score? FICO scores are the
credit scores lenders most often use to determine your credit risk. You have a
credit score with each of the credit bureaus - Experian, TransUnion, and
Equifax. Check each company’s credit report for errors. If you find any,
dispute them directly with the relevant credit bureau.
So what determines your credit score? Five components of
your credit habits determine your credit score. Improving payment history and
amounts owed will have the most dramatic effect on your credit score. Also
length of credit, new credit and types of credit used all need attention to
help you reach your long-term financial goals.
Payment History
Lenders award better credit scores to consumers with a
responsible payment record. Did you know that Late payments stay on your record
for seven years?
Do your best to pay bills on time. Try using payment
reminders to meet your monthly due dates or, even better, setting up automatic
payments. If for some reason you do miss a payment, catch up as soon as you
can. The longer your record of on-time payments after a late payment, the more
your credit score should improve.
Amounts Owed
Low credit card balances and ample available credit show
lenders that your debt is under control. So reducing your outstanding debt is
the quickest way to improve your score. A good tip is to pay as much as
possible on your highest interest rate accounts first while keeping up at least
minimum payments on the rest of your accounts.
Length of Credit History and Types of Credit Used
Lenders prefer consumers with an established credit history.
If you don’t currently have any credit, start now.
Good types of credit to use include credit cards and
installment loans. Build a good history by opening a credit card and making
small purchases and timely payments.New Credit
Avoid opening too many new accounts too quickly as this will
lower the average age of your credit history and hurt your score. Managing new
credit responsibly can improve your score. However don't open unnecessary accounts
just to boost your score as it's unlikely to have the desired effect.
Check Your Credit Report Yearly
Set a reminder to check your credit report once a year. Once
yearly you can request a free copy of your credit report from all three credit
bureaus by going to www.annualcreditreport.com.
The Boehmer Team
If you need assistance finding a great mortgage loan officer
for getting home financing, The Boehmer Team can help. We can recommend names
of experienced industry professionals that have given top-notch service to our
clients. To contact us visit www.TheBoehmerTeam.com.
