“In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin
…And your credit score.
Unfortunately, your credit score is kind of like your shadow; it doesn’t matter where you go or what you do – it will always be attached to you. And if you’ve struggled financially in your past, you may be alarmed by the number you see when you check your score.
A low credit score isn’t the end of the world, but it is something that you will want to address and take steps towards improving, particularly if you’re planning on applying for a real estate loan in the near future. And although nonbank lenders place less emphasis on an applicant’s credit score during a real estate loan application than a traditional bank would, it’s still important for you to take the right steps towards raising your credit score.
Here are four efficient methods you can use – starting today – to work your way towards achieving a better credit score.
It’s natural to be somewhat afraid to check your credit score – particularly if you know that it’s not great. However, if you don’t know what your current score is, how can you expect to raise it? You need to know where your ground zero is – aka your credit score – so that you have an idea of how much time and effort will be involved with the rebuilding process.
You should also check your score to ensure that everything is listed correctly, such as late payments and amounts owed. If you find a discrepancy while checking your score, dispute them ASAP.
The Fair Credit Reporting Act states that the credit bureau and the organization that provided your credit report are responsible for modifying any errors/incorrect information on your credit report.
If you believe that there is an error on your report, you will need to reach out to both parties and present to them the information you believe is incorrect, identify which specific items you’re disputing and request that it be deleted (or that they issue a correction).
Once the error has been fixed, most states will send you a free copy of your credit report so that you can verify that everything is up to date.
A huge chunk of your credit score – 35 percent, to be exact – is comprised by your payment history. Even payments that are only a couple of days late have the ability to drastically affect your credit score.
There are a few ways you can avoid being penalized for late payments. Most card providers will allow you to set up payment reminders; you can also set up reminders in the calendar on your phone.
Credit card companies typically allow account owners to reminders in the form of text messages, emails and/or phone calls.
The second largest factor in determining your credit score (after your payment history) is amount(s) owed, which comprises 30 percent of your score.
Moving forward, you should aim to keep your credit balances below 30 percent of the max limit of the account. As you can probably guess, the less you use/owe, the more it will help your score as you move forward.
Additionally, research indicates that keeping your card at a 10 percent use ratio will have the greatest effect on raising your credit score.
If you’re interested in finding out what type of real estate loan you qualify for with Gravity Capital, please contact us or fill out our simple online application form.
Even if your credit score isn’t optimal, we’re still interested in helping you find the real estate loan that you need. Don’t wait until your score is perfect to apply – you can still apply for a real estate loan while you begin working on the above strategies to improve your credit.
