Is your poor credit preventing you from purchasing a home?
If you have been stuck in the hamster wheel that is the home buying process, then it may be time to look at your credit. Here are three things that you can do if your credit is putting a cork in your plans!
Consider Experian Boost - Bills you pay every day like your rent, wifi, and utilities are usually not reported to the credit bureaus, so you don't get credit for making on-time payments. Through Experian Boost, consumers can allow Experian (one of the major credit bureaus) to connect to their bank accounts to identify utility and telecom payment history. After a consumer verifies the data and confirms they want it added to their Experian credit file, an updated credit score will be delivered in real-time.
Keep Balances Low - Your credit utilization is another important factor in your credit score. It's calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. For example, if you have $1,000 in outstanding credit card debt and your overall credit limit is $5,000, then your credit utilization is 20% ($1,000/$5,000). Lenders typically like to see credit card utilization of 30% or lower. However, I have seen much larger bumps in my credit when my credit card utilization was under 10%. A low credit card utilization tells lenders that you manage your credit well.
Don't open too many credit accounts - Additionally, having too many credit accounts makes you more likely to spend money you don't have! As mentioned before, too many hard inquiries can negatively impact your credit score.
There are 5 main factors that impact your credit score: Types of credit used (35%), new credit (10%), Length of credit history (10%), the amount owed, (15%), and payment history (30%).
Some common ways to increase your credit:
Pay your bills on time
Consider Experian Boost
Keep balances low
Don't open too many credit accounts
Be mindful before closing old accounts
Continuously monitor your credit
Be cautious of credit repair services
Always negotiate with collections agencies
Your credit score goals should never feel impossible. With proper planning and budgeting, you'll discover that your goals are within reach. I'm here to assist you as a financial advisor. Use this eBook to head into 2022 and reclaim your credit score!
