How Can I Improve My Credit Score?

Did you realize that your credit score reflects your credit risk?

A credit score or sometimes referred to as FICO score is a number based on information from your credit file. It shows how likely you are to make timely payments on a loan. When your score is higher you are less risky, thus you pose less risk to lenders and are more likely to get a better rate.

Your credit report comes from 3 different credit bureaus: Experian, Equifax, TransUnion
The bureaus receive information from companies that have given you credit in the past. They consider payment history, length of your credit history, types of credit you have and amounts owed. Each of the credit bureaus creates a report with this information and derives a credit score which ranges from 300 to a perfect 850. If your score is above 700, you will usually get a relatively low rate. If your score is 760 or above, you will be charged the lowest rate.

Ways to Increase Your Score:
1. Pay your bills on time. Never be more than 30 days late.
2. Keep balances low on credit cards. Try not to charge more than 1/3 of the total line of credit.
3. Don’t open a lot of different credit cards you do not need. Your account age is an important factor in the credit score and new cards do not help. I prefer 2-3 credit cards with no department store cards.
4. Have credit cards but manage them responsibly. If you do not have credit cards, you may be more of a risk since you may not have credit history.
5. Do not close accounts to make it go away. Closed accounts still show up on your credit history and could factor into your score.

If you are considering purchasing a home in Central Texas within the next year, I recommend you contact a Mortgage Lender to pre-qualify. If your credit score is not satisfactory, the Lender can offer free advice on how to improve it.

Did you know that you can receive a FREE credit report annually? For a small fee, you can receive your credit score too: