How to Improve Your Credit
Category : Banking
How to Improve Your Credit Score
Credit scores play a critical role in your financial life and whether or not you’ll be approved for a mortgage or any other type of financing.
The fact is, a poor credit score can end up costing you hundreds, if not thousands, of dollars in interest and other costs throughout your lifetime — and that’s assuming you’re even able to qualify for financing at all. If you’re suffering from a poor credit score, there are steps that can be taken to improve your credit score, enabling you to take advantage of all the benefits that having great credit affords.
If you’re looking to improve your credit score, you must first identify what’s holding your score down so that you can address the problem and focus on steps that will have the greatest impact. Here are four steps that will get you started:
1. Check Your Credit Reports for Accuracy Your credit score is based solely on the information reported to the three credit bureaus. (Experian, Trans Union, Equifax) If the information in your credit report is inaccurate, so too will be your credit score. For this reason, you want to make sure you check all three of your credit reports for errors periodically. If you find errors, be sure to dispute the items directly with the credit reporting agencies to have them corrected. Under the Fair Credit Reporting Act, you’re entitled to one free credit report from each of the three credit reporting agencies once every 12 months. Learn how to claim your free annual credit reports.
2. Find Out Where Your Credit Score Currently Stands After you’ve verified that the information in your credit reports is accurate, it’s time to find out where your credit score currently stands. Unlike credit reports, your credit score is not included in the annual free report so you’ll need to either pay for access or contact a mortgage loan advisor at Liberty Bank. He/she will be happy to help you obtain your credit scores and usually this is a free service provided by the bank if you are ultimately seeking a mortgage loan.
3. Find Out Why Your Score is Low Credit scoring models (understanding FICO ) are designed to include “score factors” or “reason codes” that explain where you lost the most points in your credit score. These factors are specific to your individual credit history and will vary from person to person but give you an idea of where to start.
4. Outline Your Plan and Stick to It Now that you’ve identified the causes of your low score you can put a plan in place and stick with it until your scores have reached your target score. There is no “one size fits all” credit improvement plan, but with the help of your score factors and advice from one of Liberty Bank’s experienced mortgage loan advisors, you’ll be able to outline your very own credit score improvement plan that’s specific to your credit DNA.
Generally, there are three main reasons for low credit scores — too much credit card debt, negative information caused by poor credit management, or a combination of the two.
If you would like help in understanding and improving your credit contact one of Liberty Bank’s experienced loan advisors.