Let's Talk Credit - 5 Simple Ways to Help Your Score

Having a healthy credit score is a must if homeownership is a goal for someone!! My top 5 tips include:

1- Leveraging Credit Cards

2-Cleaning Up Your Report

3-Using Debit Card to Grow Credit

4-Make All Payments on Time

5-Less is More

Let’s dive into number 1- Leveraging credit cards. Michelle Human, Mortgage Loan Expert with Cross Country Mortgage, advises, “Limit usage of your available credit cards to under 24% of the available credit limit. Ex: if limit is $1,000 don’t charge over $240 and if you do then pay it down before the reporting cycle for that card goes to the bureaus. This is what makes up 35% of the scores!”

Credit cards can be great tools to leverage a high credit score OR to repair a damaged one. To establish new credit, obtain a simple low limit credit card. Use it monthly, keep the balance below 24% of the limit, and pay it off every month. To help repair damaged credit do the same! If your credit is damaged, due to credit cards being maxed out. Look into transferring the balance to a card that provides no interest sign up for 12/24 months. That way you aren't fighting paying interest in a rabbit race. Then truly utilize that 12/24 month of interest free balance transfer, to pay off your balance as fast as possible with no interest.

2- Cleaning Up Your Report! Here is some more advice from Mortgage Expert Michelle Human, “Any past due or closed accounts that are charge offs call the creditors and ask creditors to settle for a lower amount to get them paid off. If they’re continuing to report, then it’s always going to bring the scores down. Medical collections still affect credit but not as badly as actual credit accounts that are past due, in collection or the creditor had “charged” off. Get a letter from them to show the zero balance to make sure the account gets reported correctly. You can send the letter to the credit bureaus directly to make sure this happens quickly.” You can open a free account with Experian to see what exactly is on your credit report. Do that here.

3- Using a Debit Card to Grow Your Credit! Do credit cards make you nervous? Maybe you can’t get approved for one? Snag an Extra Card. This is a debit card that builds your credit!!! It reports to credit bureaus your daily charges. The Extra Card only holds your balance for 24 hours, and then the charges are directly withdrawn from your account. No getting behind on large credit card payments! A lot of my clients have had excellent boost in their credit from this awesome debit card cycle. Learn more here!

4-Make All Payments on Time! This one is self-explanatory, but sooo important. Your car payment, your cell phone, your light bill- absolutely everything! A late payment on your report can affect your credit for months. If you’re struggling to make payments on time, try to pick up a side hustle or two. I had one client who did Uber Eats after work two nights a week to bring in extra income while trying to repair their credit. After two years of dedication, they closed on their dream home. Slow and steady always will win a race!

5-Less is More! Do not go apply for everything in the world with the mindset that the more credit cards or accounts you open the faster your score will grow. That isn’t true! Less is more. Too many hits on your credit will bring the score down. Our last little tip from Mortgage Expert Michelle goes over just this, she says “Don’t open too many new credit card accounts. 1-2 is enough to start to rebuild credit. The longer an account is opened and used with the ideal responsible credit usage of 24% or less of the limit then the scores will increase. Too many new accounts and inquires will bring the scores down.”

Happy Credit Building!