Ways to Improve a Credit Score

First, a little background on credit scores: Your credit is based on something called a FICO score which is used by mortgage lenders and others in the credit industry. The typical FICO score is based 1/3rd on your payment history, another 1/3rd on the amount of your debt, and the balance is based on other factors such as the length of your credit history, the amount of your new credit, and types of credit in use.

Second, scores range from 350 to 850. The higher your score, the better the interest rate you will receive when you do any type of borrowing, plus with a higher score you have more financing options. Ideally you want your score to be over 650, and a really good score is 760.

You can get a free credit report and learn your score by going to www.annualcreditreport.com or call 1-877-322-8228. There are 3 nationwide credit reporting companies and their information is consolidated at this site. Once a year you can get a free credit report at this site.

To improve your credit . . . First, review your credit report for accuracy. Mistakes on your credit report should be corrected. Second, make sure you are current on your bills, and continue to pay your bills on time. Third, keep balances low on revolving credit card accounts. Fourth, pay off debt rather than moving it between credit cards. Fifth, if you're buying a home, allow me to connect you with a preferred mortgage lender who can help prepare the best loan package for your circumstances. Even with a lower credit score, buyers are often surprised to discover how the lender can help to improve that score and also find a particular program to help them get the home of their dreams!

If you have any questions about the Fair Credit Reporting Act, please do not hesitate to contact me by email (barbara@bgaines.com) or phone (800-923-3245).