4 Tips for Helping Improve Your Credit Score Long-term

If you are ready to become a home buyer or refinance your home, the initial step is to get approved for a home loan. To do that, you will need to get a handle on your credit history and credit score. If your credit is challenged, you may want to consider methods of increasing your score so that you can begin the process of buying your first home.


tips_to_improve_your_credit_score_blog.jpgThe key factors that go into a credit score are payment history, total amount owed, length of credit history, types of credit in use and new credit accounts. Improving your credit score takes time, effort and focus and can be a really gratifying experience. Here are four tips on how to improve your score.



Use Your Existing Credit

In most cases, using your existing credit responsibly is one of the best ways to improving your credit score. The general rule of thumb is to use your credit card every month and keep the balance low. Ideally, you want your ratio to be 30 percent or below. For the maximum impact on your FICO score, you will want to be using only 10 percent of your allotted credit line. Also, keep in mind that maxing out a low-limit card each month, even if it represents a fraction of your credit, can hurt your score.

Think about using your credit for the purchases you must make on a regular basis like groceries or gas for your vehicle. These are purchases you will be making anyway, and as long as you are consistently paying off those purchases on a monthly basis you will be improving your credit score.


Focus on Current Debt

You may consider putting most of your effort into correcting current debt that has become a serious problem. If you are in the collections process with any outstanding balance it is advised that you remedy it. Revolving debt, or debt that has existed for a long time and there hasn’t been much progress made on, can be damaging to your credit score. So come up with an aggressive plan to tackle it.


Pay Your Current Good Standing Accounts

If you have balances that are in good standing and have been paid regularly, make sure you keep it up. Regular, on-time payments can do wonders for a credit score. Making minimum payments is good, but going above and beyond when you can and making payments over the minimum monthly payment threshold looks good to the bureaus and helps you pay down the balance faster. If you pay a balance off on a credit card, consider not closing the account completely and cutting up the card. While tempting, closing accounts may be detrimental as having open, zeroed-out balances looks better.


If You Don’t Have Enough Credit, Start a New Line

Sometimes not having any credit at all is the reason for a poor credit score. If you have been too shy about taking out loans and opening credit cards, it may be time to change that. Opening a credit card or two and being responsible with the purchases and payments on those cards is invaluable. This shows a potential lender that you are responsible and can take on a home loan.

Being informed and diligent is how to make sure your credit is up to par when it comes to applying to get pre-approved for a home loan. There are Several loan programs available for first-time home buyers. Check out your options as you implement your strategy to improve your credit score.*

*Note: American Pacific Mortgage Corporation is not a credit repair company; this information is for information purposes only. We are not licensed credit repair specialists or counselors.