10 Tips for Improving Credit Score
Johnson Fedrick writing at INMAN offers 10 tips for improving credit score. “Real estate is a booming business in the world. To get loans quickly, potential homebuyers need to keep an eye on their finances and credit.”
Despite years of recovery and stabilization, as well as increased demand for housing purchase loans, mortgage credit remains tight today. Below, you will find 10 tips for improving credit score that will help ease the process of acquiring a home loan.
- Always pay on time. If you have a frequent history of missing your equated monthly installment (EMI), you will end up with a lower FICO score.
- Keep your credit owed within limits. A good ratiois not having your unsecured credit outstanding above 50 percent of your annual salary and keep your credit card balances within half of the allowed limit.
- Always pay on time, in full. This is one of the most important 10 tips for improving credit score. “On-time payments improve your credit score tremendously. It carries almost a 40 percent weight on your score
- Use two credit cards if you are a definite credit card spender. “This is good and bad advice at the same time. FICO does not consider spending money on two credit cards as one. But if you have two credit cards, you can keep your usage percentage in control.”
- Maintain a good mix of good and bad loans. Home loans and business loans are considered good loans. Personal loans and credit are considered bad loans.
- Pay high-interest loans and small loans first. They tend to have a higher interest (typically 15 percent to 36 percent).
- Close your unwanted savings accounts. If you have less than your Minimum Average Balance (MAB), it will start to affect your credit score.
- Check your credit reports regularly. Check your credit score at least once in a year, so that you can seek clarification on any mistake and have it corrected.
- Monitor your co-signed joint accounts properly. “In instances of co-signing a loan or maintaining a joint credit account, be careful when dealing with someone outside your close family. You need to monitor the statements closely to make sure everything is in order.”
- Negotiate if you cannot pay on time. This is also one of best 10 tips for improving credit score. If you know you will not be able to pay on time, negotiate with your bank. Banks will be willing to extend your loan period and reduce the EMI if they see a genuine customer.
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