Is Raising Your Credit Score Your New Year’s Resolution? – Trying to decide on a good New Year’s resolution for 2023? Consider making yours work to raise your credit score. It might not be as hard as you think, and the benefits are significant. If you are hoping to buy a home in 2023, having your credit score as high as it can be is one of the best things you can do to secure the best rates for your mortgage.
There are many things you cannot control in the home shopping process, but raising your credit score is one thing you can do something about. Keeping reading for 3 action steps you can take in the New Year to get your score into its best position.
To learn more about whether you are ready to buy a home, contact us anytime! Is Raising Your Credit Score Your New Year’s Resolution?
1. Set up automatic payments
One of the ways credit bureaus determine your credit score is by looking at your payment history. If you have a history of forgetting a payment here and there, set up automatic payments to begin building a better reputation with these credit bureaus. Even a minimum payment made on time will be far better for your credit score than a higher payment that is made a few days late.
You can choose to set up automatic payments for the minimum amount, and then make additional progress on the balance by making extra payments if desired. This is a solution that won’t cost you a dime, but will make a big difference on building your score.
2. Request higher credit limits
Another feature credit bureaus review to determine your score is your credit utilization rate. This is calculated by comparing the balance you carry on your credit account with your credit limit.
For example, let’s say you have a credit limit of $10,000 on your credit card, and you have a $2,500 balance on it. In this scenario your credit utilization rate would be 25%.
There are two ways to lower your utilization rate: paying down the balance or raising your credit limit. If you have a good payment history, you may be able to raise your limit. Contact customer service for any of your accounts to find out if you can raise your credit limit; this is another way to boost your credit score without spending any extra money.
3. Dispute credit reporting errors
Are you concerned that your credit score took a hit because of an error? Set aside some time to call credit reporting agencies and dispute the error. This can take some time, but if you are able to get the erroneous dispute removed from your credit report you may be able to make a major impact. Depending on the error, it could be dragging down your score by a significant amount.
With all of these credit score tips, and others, remember that the earlier you tackle them the better the impact will be. It takes time for these changes to be reflected in your credit report, so don’t wait until a few days before you apply for a mortgage to make changes.
Want to learn more about qualifying for a mortgage, or find out if you’re ready to buy a home in the New Year? We can help! Contact us any time to talk with one of our loan offices.