Getting a Higher Credit Score
In order to obtain anything, whether it is a mortgage, a credit card or any item that requires a look up of your credit, your credit score plays a huge role. This credit score, which derives from good and bad points in your credit reports, is the single most important factor in obtaining a mortgage for a new home (unless you have enough cash to put down).
If you’re going for a mortgage, don’t get the free credit reports or the $8 reports you see on the Internet, they simply do not have enough information for you. The “merged comprehensive reports from the big 3 credit bureaus” are the ones to get, from sites like Experian, True Credit or Equifax. These credit reports cost a bit more, but remember you are about to make the biggest purchase of your life and you only get one shot at getting it right, so get a 3 Bureau Online Credit Report, the banks do it and you do it also.
Obtaining a Higher Score
Don’t open a lot of credit accounts. All you really need is a couple of credit cards and nothing else. Stay away from department store cards, almost all of which are 21% APR, especially if you already have other lower APR credit cards. The stores entice you with free gifts or 10-20% off your purchase if you sign up, but don’t fall for that trick. Once you sign up they have you and you’ll be paying 21% APR, because few people pay their department store bills in full. Don’t sign up thinking, “I’ll just get the free gifts or discounts then close the card.” Most people don’t follow through.
If you financed a car, a computer, or furniture, make sure the account is marked CLOSED on your credit report when it’s paid off. You don’t want any excess luggage lingering around on your report.
Pay all your bills on time, and always pay more than the minimum or it will take you up to 10 years to pay it off. Try to keep your balances low, especially when you are applying new for credit.
Don’t apply for new credit within 6 months after you move to a new address or accept a new job, as you may be rejected. Many creditors will turn you down if they can’t verify your address in the phone book or if you have not been at the same job for 6 months.
Also, don’t apply for new credit if you have recently been approved for credit somewhere else. Stick with no more than two credit cards, and don’t open new credit cards. Pay them on time, and keep them in good standing. Accounts that have been in good standing for your entire credit history help bring your beacon score up.
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