Raising Your Credit Score - What NOT To Do

It's never too soon to start working on building a great credit score. Having a strong credit rating is essential in order to secure low-interest home loans for you and your spouse, which makes buying a home at the Lake of the Ozarks MUCH more affordable. Raising your credit score takes time, so it's time to start preparing now if you're planning on buying a home in the next few years.

There is a right and a wrong way to go about raising your credit score. If you're trying to increase your credit rating, make sure you DO NOT do the following:

(Don't) Only Pay The Minimum Balance On Your Credit Cards
Your credit rating reflects how accountable you are at paying your bills on time. When you're applying for a home loan, mortgage lenders want to know they can count on you to pay them back for the money the initially spend on your home. Only paying the minimum balance on your credit cards makes it look like you cannot be trusted to make full payments, which will cause your credit score to drop. You should pay your credit card bills in full every month.

(Don't) Run Up High Balances On Your Credit Cards
This tip can seem confusing at first. It is a good idea to use credit cards and pay them off in full every month, because this shows creditors that you can handle debt responsibly. However, it is not a good idea to max out your credit limit every month. In fact, you should ideally only use 30% of your credit limit. For example, if your credit limit is $2,000, you should keep your outstanding balance at $600 or less.

(Don't) Run Up Small Balances On Multiple Cards
Your credit rating is supposed to tell lenders how responsible you are with your money. Having outstanding balances (even small ones) on multiple cards can make it look like you do not manage your money wisely. Pay off these extraneous balances and choose one or two cards to use exclusively in the future.

(Don't) Apply For New Credit Frequently
When you take out a loan for a car, open a new credit card, or take out a mortgage loan, it looks like you're doing so because you cannot afford to make these purchases without assistance. In some cases (such as car loans or home loans), this is probably true - and that's okay. Opening these new lines of credit causees initial hits to your credit rating, however, so do not apply for for new credit back to back. Space out your applications for new credit over time.

(Don't) Take Your Time
Rest and relaxation is wonderful, but it has its time and place. If you're applying for a new loan, it's important to act quickly. Every time a lender checks your credit score when qualifying you for a loan, your credit rating drops a little. Creditors understand the importance of shopping rates, however, so they have instituted a new policy to allow for this. Under the new agreement, multiple lenders can view your credit rating in a specific amount of time without hurting your score. Your credit rating won't be hurt by multiple lenders looking into your credit score, then, as long as they all do so within that window. When shopping for interest rates, act quickly.

I hope you find these tips helpful!
Working on your credit score now will better prepare you for purchasing a Lake of the Ozarks home in the future. When you're ready to start looking for homes in Lake Ozark, Osage Beach, Eldon, Linn Creek, or Sunrise Beach, give me a call! I look forward to helping you find the perfect home for you.

Susan Spica, Professional Realtor

BerkShire Hathaway HomeServices
101 Crossings West, Ste. 202
Lake Ozark, MO 65049

Office: (573) 365-6868
Susan's Cell: (573) 280-0484
Gina's Cell: (573) 889-9477