Improving your credit score

Improving Your Credit Score

July 6, 2023

Maintaining good credit is essential for financial stability. A good credit score is necessary to secure any loan, including a mortgage. If you’re wanting to improve your score or want to know how to keep it healthy, there are several things you can do. We have some general tips for getting or keeping your credit score healthy.

  • Always pay your bills on time. Late payments and collections can harm your credit score. By paying bills and making payments when they are due, will keep your score healthy and slowly improve it over time.
  • If you miss payments, catch up as soon as possible. The longer you make timely payments, the better your credit score will be. If you are unable to pay a bill, consider asking for an extension from the creditor.
  • Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for up to seven years. However, it is important to have it paid off before applying for credit. Keep proof of all paid collections as backup in case the payment is not reported. 
  • If you are struggling financially, reach out to your creditors or a legitimate credit counselor. Although it won’t immediately improve your credit score, managing your credit and paying on time will eventually raise your score. 
  • Keep balances low on credit cards and other revolving credit. Having high outstanding debt or high debt ratio can affect your credit score. Aim to keep all balances under 50% of your available limit to improve your credit score or keep it healthy.
  • Pay off debt instead of moving it around. The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score. 
  • Don’t close unused credit cards as a short-term strategy to raise your score. Paid off credit can be a good thing. Even if all credit is paid off, you must keep some accounts open to maintain your credit history. No score can be little different from a bad one.
  • Don’t open too many new credit cards that you don’t need. Doing so could lower your credit score. The rule is a happy medium of just enough accounts that allow you to leverage your credit that demonstrates you can properly manage it.
  • Re-establish your credit history if you’ve had problems in the past. Opening new accounts responsibly and paying them off on time will raise your credit score in the long term. You may also want to ask for credit increases if you’ve been paying on time for a period of time, as some creditors look at the amount of credit you’ve been responsible with.
  • Be cautious of allowing too many creditors to view your credit history. Having your credit history viewed too often within a year can lower your score.
  • However, it’s okay to request and check your own credit report. This won’t affect your score as long as you order your credit report directly from the credit reporting agency or through an authorized organization. Looking at it regularly will also help you better maintain and improve your score.
  • Have a variety of credit types, but manage them responsibly. In general, having credit cards and installment loans and paying them off on time will raise your credit score. Note that closing an account doesn’t make it go away, as it will still show up on your credit report and may be considered by the score. 

Your credit score is a reflection of your ability to properly use and manage your credit. With a high score, lenders will feel comfortable approving you for more substantial debt, such as a mortgage. With these tips and essential guidelines, you’ll be able to improve and maintain a healthy credit score.if you have more questions about your credit or credit scores in general, be sure to contact our expert team at Main Street Mortgages.

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