How Long Does it Take to Improve My Credit Rating?
The housing market is calling and you want to get ready to answer. You have already worked on building a sizeable down payment, have crunched numbers to know exactly what you can afford and now need to work on improving your credit score in order to get your lowest mortgage rate possible. Improving your credit score takes financial discipline and that will ultimately affect the amount of time it takes to raise your credit rating. You should give yourself several months to thoroughly address the task at hand.
Like Rome, credit ratings were not built in a day. To understand how to improve your credit score and why the process may take several months, you need to grasp the core system that establishes your credit score in the first place:
- 35% – Based on making timely credit card payments
- 30% – Credit Utilization Ratio
- 15% – How long is your credit history
- 10% – How often to you apply for new lines of credit
- 10% – Wild card factors such as the types of credit lines
Each factor affecting your credit score needs to be addressed to improve your credit rating. There
are some tried and true tips you can follow which should help raise your score over a period of time.
- Check your credit score and set a goal
- 25% of all credit reports have errors, utilize the 100 word space on your credit bureau file to help clarify mistakes Stop shopping and accruing new debt
- Pay down your existing debt to raise your credit utilization ratio
- Do not close or let credit card companies close any existing lines of credit, as that will lower your amount of credit and lower your credit utilization ratio
- Start paying all your bills on time (that includes both credit card debt and utility bills)
- If you missed payments, play a fast and furious came of catch up
- Do not apply for any new lines of credit
Many consumers are learning the hard way about the value of a good credit history. By aggressively pursuing ways to improve your credit score, with a bit of diligence you can prove to the credit bureaus your level of improved responsibility. By doing so, you will be able to reap the rewards in the not so distant future.Source: www.gobankingrates.com