5 Ways to Increase Your Credit Score

Those lenders like to see a high credit score and if you want the best rate and terms, it’s a good idea to bump it up as far as you can before you apply. Getting a better rate on a mortgage loan can actually save you thousands, maybe even tens of thousands over the years, so it really pays to get it as high as you can. Here are some simple ways to maximize your credit rating.

#1. Pay on time.

One of the best ways to increase your credit score and especially maintain a high credit score is to simply pay all of your bills on time. This includes all type a revolving debt like credit cards and student loans as well as utility payments, cell phone bills and other invoices that you might get on a regular basis. Pay them before the due date.

#2. Have your salary paid into your bank account automatically.

Having your salary deposited directly into your bank account establishes a record of your income. This helps banks and lenders get an overview of your income versus your expenses and can assess how responsible you are in managing your finances.

[Read More: More ways to increase your credit score quickly]

#3. Prevent any overdraft charges.

Don’t want to see that you have overdrawn in your checking or savings account ever. Overdrafts are a courtesy service from many banks but it’s not something that they prefer to do and it could cause a hassle if you don’t rectify the matter within days. History of overdraft charges could be a black mark on your credit record.

#4. Continue to build your credit record.

If you have a poor credit rating or you’re just now establishing credit, get a copy of your credit history and report and start managing it as you would your checking acount. Make sure all the information is up to date and accurate. Get a credit card and pay it off every month. (only if you don’t already have any established credit).

#5. Don’t cancel credit cards that are completely paid off.

This is a tricky one and one that many people forget. They figure, once I have paid off the credit card I can cancel it and I will look better. The problem is, you will now have maxed out all the credit card you have active rather than being able to show that you have active credit cards that have no balance. For instance: let’s say you have three credit cards. All three of them have a $5000 balance and they are all maxed out. If you pay off one credit card completely now you have two credit cards that are maxed out and one with available credit. That looks better then canceling the one you’ve paid off and now you have two credit cards that are maxed out.

Honestly, managing your credit score, increasing your report and rating will help you get the best rate and the best terms for your home loan. If you’d like some information about local lenders and mortgage officers I’d be happy to give you some great referrals.