5 Credit Tips to Increase Your Credit Score

Tip Number 1:

Pay your payments on time. I know what you’re thinking….. duh. I like to make sure I’m perfectly clear on what I’m telling you. Like to the very obvious. I’ll explain why. One time I was doing a buyers consultation with a couple who is interested in one of my listings. It was going great. Super nice couple.  I gave them a lenders name and number. They contacted her later in the day. Not long after,  she contacted me and told me they would not qualify for a mortgage, because they were currently in foreclosure on their current home. They thought they could really buy another house while they were going through foreclosure. I was a little surprised, but if you don’t know, you don’t know. So after that I just wanna make sure I explain myself well.

Now the other thing  is, that just because you don’t pay on time doesn’t mean that it’s automatically going to be reported on your credit, if you’re a few days late. So let’s say your car payment is due on the 10th of each month, but this month you pay it on the 12th. While you will have to pay a late fee more than likely, it’s not gonna be reported on your credit as a late pay. Now, if you were supposed to make your June payment, but you weren’t able to make that payment until July 11 or even the 10th, they can report it on your credit as a 30 day late and that will drop your score a lot. Like I’ve seen 100 point drop before.

Tip Number 2:

Be an authorized user on someone else’s credit card. I wish I knew this one years sooner, so I could have helped my kiddos out. Here’s how it works…..It needs to be someone who has a long history of paying on time and having the card a while. The balance can’t be too high, 30% or less. If it’s higher or maxed, it will hurt you. I would suggest it’s someone you have easy access to talk to. Parents for example. So you ask them to add you as an authorized user on their credit card. The creditor will send a card with your name on it, but really, your parents can just cut it up. The next billing cycle it will be reported to your credit, which should increase your score significantly. Now, here’s the caveat to this…..if they fall on hard times and start maxing it out or having 30 plus days late pay, your credit is going to feel the negative impact on this. That’s why it needs to be someone you have easy access to. Make it clear that if something happens and they can’t pay, that they remove you from their credit card before a late pay hits. Once you’re removed, you won’t have any negative impact to your score. So, there is some risk.

Tip Number 3:

If the risk of number 2, makes you super uncomfortable, there’s still another option. Which is, get a secured credit card. Now, this won’t be a quick assist to raise your score, but it’s something that you will have total control over. You go to your bank with say $500 and you open an account with your funds. You get a credit card, that you use just like an unsecured credit card. Buy gas, pay it off each month. Keep your balance 30% or less. In 12 months with on time payments, you should be able to switch it to an unsecured credit card, but you will see your credit score rise before that time.

Tips Number 4:

Let’s change it up to talk about bad debt. If you have a charge off, dispute it, and report that it’s not your debt. That forces the creditor to prove it. They will have 30 days, and if they don’t show proof, it will be removed from your credit. Repeat if it doesn’t work the first time. 

Tip Number 5:

If you choose to pay off bad credit, try to negotiate with the creditor to remove it from your credit report altogether once it’s paid. Sometimes paying off the debt doesn’t help you or your score. Which, sounds weird I know. Sometimes a lender will recommend for older debt, not to waste your time with it. Meaning, don’t pay or dispute it.  So make sure you talk to your lender and find out the best way to proceed. A good loan officer should be able to give you sound advice on how to improve your score.

Bonus Tip:

While Credit Karma can be a tool to help you keep an eye on your credit reports and scores, it is not an accurate representation of your credit. A better choice is MyFico. This is the same scores your lenders will see. You can pay for all 3, or sign up for a membership.

Here’s a link on how to prepare for a mortgage. Go check that out for more info!

If you have questions that I may not have answered here, reach out to me. If you need lender recommendations, also reach out to me. My email is pam@pamgraham.com and my direct number is 904-910-3516. Text or call.