How to Raise Your Credit
As the economy recovers from the 2008 market crash, you may be emerging with a credit situation that’s not up to your standards and you may be looking to raise your credit score. In this article we will present by-the-numbers information on what kind of financing you can expect depending on your credit; along with a few simple steps you can take to methodically raise your credit score.
Evaluating Your FICO Score
FICO Score Interest Rate Example:
“Great” scores
760+ Prevailing Rate 4.19% + 0 = 4.19%
“Good” scores
700 – 759 Prevailing Rate + 0.225 4.19% + 0.225 = 4.41%
“Fair” scores
680 – 699 Prevailing Rate + 0.400 4.19% + 0.400 = 4.49%
660 – 679 Prevailing Rate + 0.610 4.19% + 0.610 = 4.8%
“Poor” scores
640 – 659 Prevailing Rate + 1.040 4.19% + 1.040 = 5.230%
600 – 639 Prevailing Rate + 1.625% 4.19% + 1.625% = 5.815%
“Bad” Scores
599 and lower Prevailing Rate + 2.875% 4.19% + 2.875% = 7.065%
Clearly, these rates can make a world of difference when it comes to how much you pay for your home over the life of your loan, raising your credit score is the best way to put yourself near the top of the list. Additionally, should your credit score fall below the “good” range, it may be difficult to get approved for a mortgage at all.
So what to do if your credit is lower than you would like? Thankfully, there are many steps you can take to raise your credit score!
4 Ways to Raise Your Credit Score
- Pay off debt.
Begin aggressively paying down your debts. This is the best way to quickly improve your credit! Begin with credit cards – particularly those that are close to their limit. Your first goal is to try to get all cards below 1/3 of their credit limit and after that to pay off cards 100% each month.
- Open a major credit card.
IF and only if you don’t already have credit card debts, then this could be the simplest solution to raising your credit score. Each and every time you make an on-time payment to a major credit card company, this information will be reported to the credit bureaus, and over time this will add up to make a difference. However, we can’t stress enough: only take this advice if you can both handle a credit card and don’t currently have massive amounts of credit card debt. Creditors will not be impressed with a chronic credit card user opening a new card—even if you do make those payments on time. Also, don’t close any credit card accounts, as this will decrease your credit score rather than raising your credit score.
- Obtain or maintain a steady income with a regular salary or wage.
Creditors will not loan money to someone who doesn’t have a credible source of money. Having a steady job is most important, followed by a regular income (making the same amount steadily each pay period).
- Pay everything on time.
DO NOT make any late payments. These will get you into a world of trouble and make you an undesirable candidate for a mortgage loan.
To learn more about how to raise your credit score, call 804-322-5200 or visit us online at bluemarblepropertiesllc.com today!