Clean up your credit reports

Lenders use your credit score to help determine the risk of lending.  The level of risk determines your interest and for how much you will qualify.  Even if you think you have great credit, errors on your reports may be lowering your score.  Make sure you get a separate report from all three major credit-reporting companies because they collect information separately and may report different errors.  By law, you’re entitled to a free report from each of these companies annually.  

  3 CREDIT SCORE TIPS

You know you need to pay your bills on time and avoid bankruptcy to keep your credit score up, but what else can affect your number?  

Here are three things you may not have considered:

1.      Keep old accounts open

Closing old credit card accounts can affect your credit score negatively in two ways.  First, it can shorten your average account age, making you look less reliable to lenders.  Second, closing accounts reduces the total credit available to you, which makes any balances you do have appear larger in proportion.

2.      Hold off on major purchases

Have money saved up for a new TV?  You may want to hold off.  While increasing debt affects your credit score, keeping money in your savings account is also important. Mortgage lenders may see you as less of a risk if you have a cash reserve to get you through tough times.

3.      Don’t apply for new credit cards or loans

Although using credit cards responsibly may improve your credit, opening new accounts shortly before or during your mortgage application process can lower your average account age and result in a lower overall credit score.  Increasing your debt during this time frame, with new loans for things like cars and furniture, can also negatively affect your credit.