Take some time to raise your score (and check your credit report for inaccuracies) before you refinance. Boosting your credit score unlocks more refinancing options and can help you secure the lowest interest rate possible. Use these quick tips to improve your credit score: First, take a look at your credit report. It’s possible you’ll find mistakes, and you could even be the victim of identity theft. Checking your credit not only lets you see what you need to improve, but it allows you to uncover issues you don’t even recognize. Our friends at Rocket HomesSM allow you to check your credit each week without affecting your score. You’ll receive your free TransUnion® VantageScore® 3.0 credit score and report. You also get personalized insights on where your credit can improve. If you don’t qualify for a loan or traditional credit card, a secured card can allow you to build credit when needed. You leave a deposit with your lender when you get a secured card, and that deposit then becomes your line of credit.Get Acquainted With Your Credit
Consider A Secured Credit Card
For example, a lender might require a $500 deposit to open a card with a $500 limit. The lender would hold onto your deposit until you decide to close the card.
Otherwise, a secured credit card works just like a normal credit card. You make purchases using your card and pay them off, plus interest, each month. Then, your lender reports your payments to the credit-reporting bureaus, which helps you build your score. Your lender keeps your initial deposit if you don’t pay your bills.
Secured cards offer a fantastic way to build credit when you might have none, but remember, you must still make your payments on time. Just like an unsecured credit card, missed or late payments will hurt your score.
Keep Your Credit Utilization Low
Credit utilization refers to the percentage of your available credit that you use every month.
Let’s say you have a credit card with a $10,000 limit and you put $5,000 worth of monthly expenses on it. In that case, you have a utilization ratio of 50%. If you use 100% of your credit, you might hear someone say you’ve “maxed out” your credit.
Lenders don’t like to work with borrowers with extremely high credit utilization ratios. Using too much of your available credit tells a lender you might not have anything in savings. It can also mean that you’re more likely to fall behind on your bills or miss a payment.
Keep your utilization ratio low month after month to raise your credit score. Your utilization ratio makes up about 30% of your FICO® Score.
Your score will generally increase if you keep your utilization ratio at or below 30%. For the biggest bump in your credit score, keep your utilization ratio below 10%. Carrying more cash with you, paying down your charges immediately and budgeting your money are all easy ways to lower your utilization.
Pay All Your Bills On Time
About 35% of your FICO® Score comes from your payment history, making it the single most important factor in building a great credit score. The fastest and most reliable way to improve yours is to build a solid history of on-time payments for each of your accounts.
Review your bank, loan and credit card statements and figure out exactly how much you owe each month on all of your accounts. Include each account’s minimum payment and due date in a spreadsheet. Remind yourself to pay each account on time every month by placing your spreadsheet somewhere that you’ll see often, like on a desk calendar.
You may also want to enable automatic bill pay if your accounts offer it. Automatic bill pay allows you to schedule a date for your minimum payments in advance. From there, your account holders automatically deduct the amount you owe. This can help you avoid accidentally lowering your score by forgetting a payment.
