In Part I we discussed the anatomy of a credit score. In today’s installment I will be discussing how you can get a copy of your credit report and ways that you may be able to increase your credit score.
The federal government allows you to access your credit report annually for free. There are many websites and television commercials that tout free credit reports. Be aware most websites and television ads want you to sign up for some other service that does have fees associated with them.
The official site is www.annualcreditreport.com. I also have the toll free number and mailing address for those that are interested. This will get you access to review your credit report. This site will not give you credit scores for free. Why bother if no score is given?
1) First and most important, is the information listed on the credit report correct? Can you verify each account listed and agree with approximate payment and balance? Do you see anything that is outdated and should be removed? Are there errors on the report?
2) You can see your payment history. You can see how the companies have reported your payments. Have you had one 30 day late or three on that car loan since it has been opened?
3) Helps establish a game plan. By seeing your credit it can help you determine whether you are ready to buy a home or if you need to work on your credit before applying.
If you want to purchase your credit score at this time you can. Here is an interesting site that gives some insight on how the scores are considered. As you can see, different agencies consider scoring differently. In today’s mortgage environment, which is changing rapidly, having a score of 680 or better is preferred. If you have a score lower than 680, it does not mean that you will not be able to obtain a mortgage. Many factors are also considered besides credit score. They include your down payment amount, (see Saving Makes a Difference) and your debt to income ratios.
So you have seen your credit and score? How do you make it better.
- Make your payments on time. Get current if you are behind on any debt and stay current.
- Pay down credit card debt aggressively. Focus on credit cards that have balances of over 50% of the available line. Do not close cards that have zero balances Credit scoring also considers all balances vs available lines of credit. Closing an account lowers you available credit.
- Don’t applying for new credit. If your goal is to buy a home in the coming months, avoid getting additional debt. Not only will this not show additional inquiries on your report but also keep your debt to income ratio lower, allowing you to qualify for more home.
- Get errors corrected on your credit report.
And how to get those errors corrected is going be Part III of this series.