The start of a new year is full of possibilities and the perfect opportunity to focus on improving any area of your life that needs it. Perhaps the holidays took a lot out of you and your wallet, and you're looking to get back on track. Or, even if you've dealt with credit issues in the past, it's never too late to prioritize improving and maintaining a strong credit report.
Tips to Start
When it comes to cleaning up your credit, there is no better time than now to recognize the importance of your credit score and make sure your habits are helping you reach your goals.
Pull Your Credit Report
For most of us, our credit score is something we only think about when we need it. However, if you are unsure where you stand, this is a great time to find out! The Fair Credit Reporting Act lets you get one free credit report annually through Equifax or TransUnion.
Tip: Pulling your credit report results in a "soft" inquiry on your report and will not affect your credit score. Click here to get your free credit report today!
If You Find Errors, Dispute Them.
Make sure you take it seriously and carefully review each line - any errors could drag down that sweet number. If there are, dispute them immediately so they don't continue causing problems.
Consolidate Your Loans
Make your debts easier to manage by consolidating them! You can take the hassle out of juggling multiple payments each month and make it simpler with one low monthly payment. You may even be able to save on interest rates, so more money gets applied towards paying off what you owe.
To Maintain Good Credit
Once you have put effort into cleaning up your credit, you will want to keep it that way! A few tips for maintaining your credit and maximizing your financial future include:
Pay Your Bills
Taking care of your bills is key to keeping a good credit score. Paying in full and on time helps you make an impression with lenders, but if that's not possible, then the least you can do is cover the minimum - it avoids any red flags.
Pay Your Debts
Whether you have credit card debt, a car loan, a line of credit or a mortgage, the goal should be to pay your debt off as quickly as possible. To make the most impact, start by paying the lowest debt items and then work towards the more significant amounts. By removing the low-debt items, you also remove the interest payments on those loans, which frees up money to pay off more important items.
Stay Within Your Limit
Using all or most of your available credit is never advised for keeping a good credit score, and your goal should be to utilize only thirty percent or less of your available credit. For instance, if you have a limit of $1000 on your credit card, you should never go over $700.
Tip: If you need more credit, it is better to increase the limit versus utilizing more than fifty percent of what is available each month.
Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should aim for a credit score of 680 for at least one borrower (or guarantor). If you are ready to start your home-buying journey or are looking to refinance your existing mortgage, at Front Door Mortgage, we can help you review your credit score and financial information to help you get the most from your money.