Your credit score is an extremely powerful figure that decides whether you are eligible to buy a new property and whether you can seek funding for it. This year, your credit rating will make a huge difference for when you wish to apply for a home loan; all lenders will be closely evaluating your credit report. Here are a few tips to boost your credit score so that banks and other financial institutions do not see your application and conclude that you would not be a worthy contender for loan.
Check your Credit Report for Errors
There could be errors in your report and you wouldn’t even be aware of it! This can happen when you have a namesake and the credit-reporting entity mixes up your activity. It is like an identity theft where someone’s bad credit payment history can be mistaken for yours and it may prove disastrous. So make sure you are careful and keep tallying your credit score. It could also have an error of numbers. Get a copy of the credit report from credit bureaus and look for any possible clerical errors.
Do Not Apply For Many Cards
To keep the credit score high, hold only a limited number of credit cards. The lesser cards you apply for in a short span of time, the better it is. Each time you apply for a credit the application pops up on the credit report, which can negatively affect your probability of getting a loan for property investment. You will be perceived as a credit seeker which makes you a less desirable candidate for loan sanction.
Keep All Cards Active and Pay Up On Time
Simply holding a credit card may not be enough to sustain a favorable credit score. It is important that you use it to your benefit. Make sure you use your cards for small transactions, like buying lunch, etc. and then make timely payments. All your transactions will get reported and a good track record of payments will help you create a good reputation and improve your chances of getting the loan sanctioned. What you have to portray is that you can use the credit responsibly and this will help you do so. So keep the cards active to establish a advantageous credit history.
Bring Down the Debt
Many credit card users feel that to have debt on their credit cards is good for their credit score, which is false. In reality, the lesser credit you have, the better it is. It should ideally be less than 10% of your credit limit. Maxing out your card’s limit rings an alarm as it can hurt the credit score. The balance reported to credit bureaus can be from any one day of the month. Make more than one payment every month to enhance your score.
Do Not Wait Up To Pay Off Everything At Once
You shouldn’t wait for the 1st of every month (or whenever the credit card is due) to make your payments. Start making smaller payments all throughout the months through micropayments. These can help quickly lower the debt. Small payments like these help the credit score immensely as they reduce the debt utilization ratio. This ratio accounts for nearly 30% of an applicant’s credit score and it is the amount of debt accumulated on the credit card divided by credit limit on the total of your cards. You should keep it around 33%.