7 Ways to Improve Your Credit by 100 Points
By now you've heard: the better your credit score, the bigger the benefits, such as lower interest rates and easier loan approvals. Improving your credit score by 100 points is significant and can add up to big savings over time.
Mortgage lenders use your credit score to weigh the risk of loaning you money, which makes it a major factor in the outcome of your loan application. Beyond approval or denial, mortgage lenders, auto dealers, and credit card companies also use theses score to determine interest rates. Understanding the factors that affect your credit can help you improve your credit score fast and maintain it over time.
Why is a Credit Score Important?
If you’re planning to purchase a home soon, a commitment to improving your credit score by 100 points can lead to a big payoff when it’s time to apply. You don’t need perfect credit to buy a house, but a higher score gives you access to additional options with better interest rates. While a score in the 600s may be considered good, you likely won’t qualify for the lowest rate and down payment. Instead, aim for a score in the 700s to net a loan with the best interest rate.
Different lenders have various credit requirements, and independent mortgage brokers have the freedom to shop them all. Partnering with your local broker means you get to choose from the best loans and rates available for your credit, not just the best the bank can offer.
Ready to learn how to improve your credit score fast?
Fix Errors on Your Credit Reports
Go to annualcreditreport.com for your free report from the three major credit bureaus: Equifax, Experian and Transunion. Check each one carefully. If you suspect a mistake within the last two years, dispute it immediately. Identifying errors older than that may actually impact your score negatively. Credit bureaus have 30 days to respond.
Stay Below Your Credit Limit
How much of your available credit you use can impact your credit score. It’s best to not exceed balances of 30% of your credit limit. Pay more toward your balance or request an increase in your limit — either can help get you below 30%.
Tackle Past-Due Bills
Payment history is the most important factor in determining credit scores. Get current on any past-due accounts ASAP. It may be helpful to sign up for due-date reminders via text or email.
Pay Bills On Time and Fix Late Payments
Catching up on late payments can help you improve your credit score fast. If your creditors allow automatic payments, setting them up is a great way to reduce the chances of late payments in the future.
Avoid Applying for Too Much Credit, Resulting in Multiple Inquiries
Only open new credit accounts when it makes financial sense. Multiple credit inquiries over a short period can lower your score.
Clear Any Outstanding Collection Accounts
Before lenders give someone money, they want to be confident they’ll get it back. Having accounts sent to collections is viewed as a red flag that you’re not reliable.
Increase Credit Lines if Applicable
If your credit limit goes up but your balance doesn’t, it lowers your credit utilization. As long as you continue to spend responsibly, a limit increase can boost your credit fast.
By doing these three things, you can go from “bad credit” to “good credit” or even “excellent credit” in just a short time.
To learn more about how to improve your credit score by 100 points, find a local mortgage broker in your area.