Credit scores determine how much we pay for loans, insurance, and even revolving credit cards we already have accounts with.  Companies consider what your score is NOW in determining your interest rate today. Yet most people never look at their credit until they are told by a credit grantor that there is a problem.

If your credit score is below 750 you should add to your goals “raising my credit score”.  And here are some tips to avoid the most common mistakes we make:

Don’t run out and close your credit accounts!  Old credit is good credit. 

Do pay them off or down to less than 50% of your available balance and keep them there.

New credit is not good for you until it is at least 6 months old and shows a good payment history so time the opening of new accounts appropriately (not right before you’ll need your credit for a home purchase).

Check your credit report – all three; TransUnion, Experian, and Equifax.  Go to AnnualCreditReport.com.  You will get a free credit report from each company.  Schedule this task when you have an hour and a half at least and your credit account details are with you as you’ll be asked for details to verify who you are. 

Pay extra at each company to get your credit score.  It will cost you about $20 for all of them.  Each Credit Reporting agency has their own formula for determining scores.  Be aware that when you go to apply for a mortgage your score may be a little different - their formula’s are specific to mortgages but you will have a baseline to use for your goal. 

If any derogatory information on your report is incorrect file a dispute with the company that shows that information.   If it is on all three you will have to do all three. 

If you have old collections you may be able to negotiate to have it removed, call me for more details. 

Finally, don’t worry!  Raising your score simply takes time and attention.  Anyone can do it.  Remember:  It isn’t how much money you make, but what you do with the money you do get that counts.

A good credit score is the most cost-effective way to save yourself money over the long haul.

This entry was posted on Sunday, May 28th, 2006 at 7:29 pm and is filed under General Info, Financing your Home, First Time Buyers, Buyers Information. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.