Keep your
credit in shape
I
t might not be something you think about on a daily
basis, but your credit score can be the make-or-break
factor when it comes to buying a home or getting a good
interest rate on just about any loan. There are a few
steps you can take to make sure it stays in good shape.
Check your score
It might seem obvious,
but you can’t preserve or
rehab your credit score if
you don’t know what you’re
working with. Approximately
66 percent of people do not
check their credit score on
an annual basis, according
to the National Foundation
for Credit Counseling, so
this is always the best place
to start.
USA Today recommends
you start by checking
your score so you have a
baseline for where you want
to go. You might realize
you already have excellent
credit. If that’s the case, the
rest of the process should
be a breeze.
Address errors
You may have some debt
that needs to be worked on, but we’re not there yet. The first thing
you should do is go through your report with a fine-tooth comb
to make sure everything checks out as it should. Is an old loan
you’ve already paid off still showing up? Is there debt showing up
on your report that you don’t even have? These are errors you need
to address immediately, and since almost one-fourth of Americans
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do have a problem on their report, it’s never too early to start the
dispute process to get it cleared up.
Pay close attention for accounts that belong to someone else,
as it’s not uncommon to discover someone else’s bad credit habits
dragging down your score.
If you find mistakes, dispute the information with the credit bureau
as quickly as possible. All three major bureaus allow you to submit
a dispute online, which is the quickest way to get errors corrected.
Pay down debt
USA Today notes credit
score services use a metric
called “credit utilization,”
which is the ratio of your
credit
card
balances
to your credit limits.
Understandably, lower is
generally better, so the best
approach is to try to repay
some revolving balances,
if applicable, or pay your
bill a few days prior to
your monthly statement to
reduce the amount being
reported to the credit
bureaus.
Stay in the know
It’s important to be vigilant
about your credit while
you’re preparing to apply
for a home loan. A credit
monitoring service can help you keep tabs on any changes to your
credit reports so you can stay on top of the information banks will
see about your credit usage.
Pay attention to any alerts you receive through your credit
monitoring service, to be sure any changes are accurate or respond
quickly to an error.