Improve Your Credit Score

Improve your credit score by handling credit cards wisely.

To increase your credit score and become a more qualified home-buying candidate, there are a number of major financial fixes you can make, from restructuring your current home mortgage to paying down or eliminating major sources of debt such as car loans or an equity line of credit. But those are major steps, typically easier said than done. After all, if you had cash laying around to pay down debt, paying down debt would be simple, right?

Consumers might find more manageable credit-repair steps in evaluating and changing the way in which they treat existing credit card accounts. Your history with credit cards carries a lot of weight in determining your credit score, so the more quickly you can get back on track with excessive credit card spending, the more quickly your score will begin healing.

See how these five tactics can let credit card ownership work in your favor.

Get – and use – a credit card

A good credit score is reliant upon a credit card holder showing that they can manage a credit card account responsibly. If you don’t currently own a card, shop around for the best rate and open an account as soon as you can. Then use it for an occasional minor purchase, pay the balance off every month, and watch your credit score benefit as a result.

Start using an old card again

If you long ago stashed a credit card away, holding it only for an emergency situation, maybe it’s time to dust it off. By applying the same usage pattern mentioned above – minor purchase and pay off monthly – you may start seeing a slight increase in your credit score in as little as a month or two.

Reduce your credit card balances

As we addressed above, paying down debt is often a challenge for people struggling financially, but it’s still important that you pay attention to each credit card balance in relation to the credit limit of each. When your credit score is computed, part of what’s taken into consideration is the amount of available credit you have, so widening the gap between credit limit and credit balance – even little by little – is important in repairing your credit.

Dispute old negative credit flaws

Your credit track record is a key factor in determining you score, so if a negative mark from years past is erroneously showing on your credit report, call the reporting agency to have it removed. A payment that inaccurately shows as 30 days late can mar your score for months.

Ask a lender to erase a late payment

Even in cases when a credit blemish is deserved, lenders will sometimes show mercy if a number of on-time payments have been made since. And while you’ve got them on the phone, ask about lowering the interest rate on your account. In both cases, it doesn’t hurt to ask.

Have a success story about how credit card usage helped increase your credit score? Share them here and let other readers benefit. If you have questions about how your credit score is impacting the home-buying process, contact Justin Velthoen of Toucan Homes for answers to your general questions.

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