If you’re planning to move in the near future, improving your credit score might be one of the last things on your mind.
However, if you’re moving into your first home, a good credit score can dramatically reduce what you’ll pay in interest on your home mortgage. If you’re renting, your credit score may also affect your ability to land a rental property.
Regardless of your situation, a higher credit score can improve your financial situation, potentially reducing the stress and cost of moving.
Here are five ways you can improve yours:
1. Pay Your Monthly Bills on Time
Something as simple as paying your monthly bills on time can positively affect your credit score. According to myFICO, your payment history makes up 35% of your score.
It doesn’t matter how you do it: Set up an extra calendar in your home office for billing due dates, receive text message alerts from your billers, or simply keep your monthly bills front and center on your desk until they’re paid-just make sure you have a system to prevent you from paying late.
2. Check Your Credit Report for Errors
If inaccurate information appears on your credit report, that can lower your score. Use the website AnnualCreditReport.com to download your report. And while you’re at it, look for accounts that don’t belong to you (which could occur if you have a rather common name) or for paid accounts erroneously listed as overdue. If you find an error, report it to the company charging the debt. If the company won’t agree to correct your record, you can dispute any errors on your credit report from any one of the three main credit reporting agencies-Experian, Equifax, or TransUnion.
3. Keep Inactive Credit Cards Open
If you have an old credit card collecting dust in one of your drawers, don’t close it because that reduces your amount of available credit, which in turn lowers your score. Use it for a minor purchase every few months and then pay it off in full. That way, the issuer won’t reduce your spending limit or close the account entirely, both of which can happen to inactive credit cards.
4. Use a Rapid Rescore
A rapid rescore is a method usually employed by mortgage lenders where updates to your score are processed quicker than if you let them take place on their own. So, if you’ve paid off a chunk of debt recently, but it isn’t reflected in your score, a rapid rescore could help. You might have to pay a fee, but it could be worth it.
Remember, credit scores are usually categorized. For instance, if your score is 690 and the cutoff for a “high” score is 700, boosting your score by just 10 points can make a serious difference in your future financial transactions.
5. Reduce Balances
Reducing your credit card balances increases your available credit, which improves your score. To reduce what you owe, get on a budget using one of the many online resources, or simply create one with a pen and paper. Compare your spending to your income, and make appropriate adjustments so you’re earning more than you’re spending.
To begin with, eliminate your home telephone line, and set your thermostat at 68 degrees in the winter and 78 in the summer to lower home energy expenses. Once you free up extra funds, apply the money to your credit debt.
In order to monitor your credit score on an ongoing basis, try the free website Credit Karma. While it doesn’t provide an exact score, it’s close. If you want your true score, you can order it from one of the three major credit reporting agencies. Use the app or agency websites to stay abreast of any fluctuations with your credit score. And as you begin the process of house hunting, make an effort to raise your scores as much as possible before the move. When you see how much you’re saving on interest and closing costs, you’ll be glad you made the effort.
For additional information on improving your credit rating, click here.
Carly Fauth is Head of Marketing and Outreach, as well as a personal finance expert at MoneyCrashers.com. Carly has a diverse background in marketing, publicity and advertising and has also worn many hats working for various startups.
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