Your Mortgage: Boost your score

Mike Miles from Fountain Mortgage walks you through the mortgage process.

Your credit score is important. Agree or disagree with it, but your credit score dictates a lot of what happens (or doesn’t happen) to you regarding finances. The better the score, the better lending terms you will get.

If your score isn’t where you want it to be, here are some ways you can boost it:

  • Clean up your credit report – look for accounts that show late payments or unpaid bills. If any of that information appears incorrect you can dispute the inaccuracies.
  • Pay down your balance – A large part of your credit score (30 percent) is based on how much you owe by way of credit utilization. This means a relationship of balances owed compared to the high limits allowed. So, if you have a $10,000 credit card limit and owe $5,000 you have a 50 percent utilization. The lower the percentage of utilization the better.
  • Pay twice a month – this will help to maximize your credit utilization and prevent smaller credit limit accounts from being maxed out.
  • Increase your credit limit – whether or not you are in a position to pay down your balances (to improve your credit utilization), increasing your credit limit will help. It widens the gap between what you owe and what your limit is.
  • Open a new account – this may sound weird but if you do it correctly (and without abusing the idea) it will help your score. A new account gives you available credit so long as you don’t transfer a large balance. Avoid department store cards for this.
  • Negotiate outstanding balances – if you have bills that are in collection or profit and loss status you can call the creditor and try to negotiate the balance to help settle the accounts.
  • Become an authorized user – this is only recommended for the accounts held by someone you know and trust (spouse or parent as a suggestion). If the actual account holder has a good credit account length and utilization … being added as an authorized user will boost your score.

You’re entitled to one free credit report directly from the three bureaus (Equifax, TransUnion and Experian) per year. I recommend getting a copy every year. If your score is below a 720, start working on improving it. While only about 40 percent of people have a score above 720, there are many more who could but just aren’t yet practicing some of the things listed above.