Improving your Credit Score

One of the most crucial steps to take before buying a home is establishing or improving your credit score. A credit score is a statistical method to determine the likelihood of an individual paying  back the money he or she has borrowed. When you apply for a credit card, mortgage, or for any kind of financing, your credit score is checked. Credit reporting makes it possible for stores to accept checks, for banks to  issue credit or debit cards, and for corporations to manage their operations.  Depending on your credit score, lenders will determine what risk you pose to  them. According to financial theory, increased credit risk means that a risk premium must be added to the price at  which money is borrowed. Basically, if you have a poor credit score, lenders  will not shun you (unless it is utterly awful); instead, they’ll lend you money  at a higher rate than the one paid by someone with a better credit score.

So, how can you improve your credit score?

1. Get copies of your credit report–then make sure information is correct.

Go to http://www.annualcreditreport.com/. This is the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies every twelve months.

You can also call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

 

2. Pay your bills on time.

One of the most important things you can do to improve your credit score is pay your bills by the due date. You can set up automatic payments from your bank account to help you pay on time, but be sure you have enough money in your account to avoid overdraft fees.

 

3. Understand how your credit score is determined.

Your credit score is usually based on the answers to these questions:

  • Do you pay your bills on time? The answer to this question is very important. If you have paid bills late, have had an account referred to a collection agency, or have ever declared bankruptcy, this history will show up in your credit report.
  • What is your outstanding debt? Many scoring models compare the amount of debt you have and your credit limits. If the amount you owe is close to your credit limit, it is likely to have a negative effect on your score.
  • How long is your credit history? A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.
  • Have you applied for new credit recently? If you have applied for too many new accounts recently, that may negatively affect your score. However, if you request a copy of your own credit report, or if creditors are monitoring your account or looking at credit reports to make prescreened credit offers, these inquiries about your credit history are not counted as applications for credit.
  • How many and what types of credit accounts do you have? Many credit-scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score.

To learn more about credit scoring, see the Federal Trade Commission’s website, Facts for Consumers.

 

4. Learn the legal steps to take to improve your credit report.

The Federal Trade Commission’s “Building a Better Credit Report” has information on correcting errors in your report, tips on dealing with debt and avoiding scams–and more.

5. Beware of credit-repair scams.

Sometimes doing it yourself is the best way to repair your credit. The Federal Trade Commission’s “Credit Repair: How to Help Yourself” explains how you can improve your creditworthiness and lists legitimate resources for low-cost or no-cost help.

Sources:  http://www.federalreserve.gov/consumerinfo/fivetips_creditscore.htm 7 Dec 2012

http://www.investopedia.com/articles/00/091800.asp#axzz2EOp8AQyV 7 Dec 2012

 

Greater Pensacola, FL Real Estate Experts – Making It Happen for Buyers and Sellers!

Grand Realty is a greater Pensacola real estate company that opened its doors in June of 2003. We strive to help all of our clients with their individual real estate needs, whether it’s buying a home in Pensacola FL and the surrounding area or selling their existing Pensacola property.

We have approximately 30 agents with a wide range of specialties that include:

  • Pensacola new home buyers
  • Pensacola short sales
  • Pensacola Foreclosures
  • Pensacola Investment properties
  • Pensacola commercial properties
  • Pensacola vacant land
  • Pensacola water front properties

Grand Realty is also proud to say we have agents who are bilingual, Spanish and Chinese that are placed throughout a good majority of Northwest Florida including Pensacola, Milton, Pace, Navarre, Perdido Key, Jay, Cantonment, Gulf Breeze, and Navarre. The Broker of Grand Realty is also licensed in Alabama. Please feel free to email or give us a call, and from everyone at Grand Realty, thanks for your business!

Grand Realty
3806 Hwy 90, Pace, FL 32571
Office Phone: 850-512-1185
Office Fax: 850-512-1195
Email: Office@GrandRealty.net

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