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1. Check your credit reports for accuracy: One in five people have an error on one or more of their credit reports. The errors are often minor, but some can have a big impact on your credit score. One free report annually is available from the three major credit bureaus, so check at least that often to maximize your credit score.
2. Make on-time payments: A large percentage of your credit score is based on how often you pay your bills on-time. One late payment can lower your score as much as 100 points and can stay on your report for seven years. The impact of late payments decreases over time. Set reminders to pay bills on-time in order to improve your credit score.
3. Add other credit accounts: Many people do not know that you can link accounts like phone bills and utility bills to your credit account using free linking tools. Linking these accounts and paying these bills on-time can boost your credit score.
4. Keep balances low: Keeping credit balances below 30% is a good rule of thumb. On average, those with perfect credit scores use only 7% of their credit regularly. Surprisingly, it's better to have low balances than no balances.
5. Build a credit history: It generally takes several years to reach your peak score. The longer and more consistently you pay several accounts on time, the better your credit score.
6. Don't close unused credit accounts: Although low balances are better than no balances, it's better to keep unused credit accounts open in order to reduce your debt to available credit lines ratio.
7. Guard against outside inquiries: Credit inquiries indicate you will likely be taking on more debt, so can lower your credit score. Try to keep inquiries within a 45 day window, so the bureaus count them as just one credit ding.
Using the these steps will help you qualify for a loan and get a better interest rate!
Sources
Advanced Funding Article: https://www.advfund.com/blog/44076/credit/7-tips-to-improve-your-credit-before-applying-for-a-mortgage
Thanks for sharing this!