Everyone knows that when you’re ready to buy, and finance, a St. Petersburg area home or condo, your credit score becomes all-important. Without a good credit score it becomes difficult or impossible to obtain a loan. But many people don’t realize that they should be vigilant in maintaining their score. Here are some simple steps you can take to help keep your credit score up, and even repair a score that has been damaged by reporting errors or indifference.
1. Once per year you should order copies of your credit report, and then make sure the information contained in them is correct.
Once per year you can obtain a copy of your credit report from www.annualcreditreport.com without any penalties to your score (multiple credit requests in a short period will lower your score). This is the only source authorized to provide you a free, and penalty free, credit report. Under federal law, you can get a free report from each of the three national credit reporting companies from this website every 12 months.
You can get the same report by phone by calling 877-322-8228.
To get the report by mail complete the Annual Credit Report Request Form and mail it to the following address:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281.
2. Pay your bills on time.
Probably the most important thing you can do to improve your credit score is to pay your bills on time, by the due date. A lot of people damage their scores by forgetting to pay a bill here and there. Your creditors don’t care whether you forgot, you don’t have the money or your dog ate the bill. If you don’t pay on time they will report it to the credit bureaus, and it will be reflected in your credit score. If you have trouble remembering you should set up automatic payment through your bank, or use a service like http://www.paytrust.com.
3. Understand how the three credit bureaus determine your credit score.
Here are the main questions asked when determining your credit score:
- Do you pay your bills on time? Again, probably the number one factor in determining your score. If you pay bills late, or you have accounts referred to collection agencies, this will be reflected in your score.
- Have you ever declared bankruptcy? This is a no-brainer. A bankruptcy immediately destroys your credit score. But even though a bankruptcy stays on your credit report for 7-10 years, you can often purchase a home after only three years.
- How much outstanding debt do you have, and what is its relationship as a percentage to your credit limits? If you have $25,000 in available credit and owe $23,500, that’s a problem for your credit score. You are a much better risk if you have lots of unused credit.
- How many years have you been building a credit history? A short credit history can have a negative effect on your credit score, but may be offset by timely payments and low balances.
- Have you had requests for new credit recently? Multiple requests for credit in a short period of time can lower your credit score.
- How many accounts do you have? Having a balanced mix of credit accounts, between installment loans like a car payment, and revolving credit like credit-cards, can improve your score. Having too many finance company accounts or credit cards can lower your score.
4. Learn the legal steps you can take to improve your credit score by correcting credit report errors.
The Federal Trade Commission has a great report at the following site: “Building a Better Credit Report” . There you can find information on correcting errors in your report, as well as more tips on improving your score.
5. Watch out for credit-repair scams.
There are loads of bogus companies out there claiming they can fix your credit score. As a rule, if it sounds too good to be true it probably is. Many of these companies offer to raise your score over a short period of time for a fee, and many times they can actually hurt your score. Don’t fall for it.
Doing it yourself is the best way to deal with improving and maintaining your credit. With a little effort and ongoing vigilance you can improve and maintain your credit score, and when the time comes to apply for that home or condo loan those efforts will pay off in a big way!
You can find more information from the Federal Trade Commission at: “Credit Repair: How to Help Yourself”
