One of the common misconceptions out there is that paying your bills on time will get you the highest credit scores. This is only one of the ways to accomplish great credit.
Are you interested in getting 800+ credit scores? Please continue to read and I will help break it down for you through our Years of experience pulling credit.
Pay your bills on time: This is the obvious first step. If you go 30 days late (or 60, 90, 120, etc.) it is extrememly hard to have this removed from your report. You especially do NOT want to be late or have a collection after a bankruptcy. This will make it very hard to get a loan.
Manage your balance/credit limit wisely: To acheive the highest scores, it is imperative that you have a balance less than 20% of your available limit. If you owe more than 50% of your limit, it is bringing your scores down. If you owe between 20 to 50%, it is keeping your scores the same. If you owe less than 20%, it is improving your scores. If you are going to buy a home soon, pay down your accounts. Always start with the smallest card (limit) and work your way up!
Don't close accounts: Closing accounts can and will have a negative impact on your credit. If there isn't a yearly fee and there is no need to close an account, keep it open. The longer you have an account and the balance is close to zero, it will only improve your scores.
Length of accounts: The longer your accounts are open, the better your credit will become.
You must have credit to have a credit score: This is a big problem for most people. If you don't have credit cards or only have one, be prepared to have poor to fair credit. Credit is based on many different factors one of which is how many accounts you have. Most people that have 800 credit scores tend to have 6 to 15 open tradelines/accounts. If you have limited credit right now, start opening a couple accounts. If you don't have good enough credit, be prepared to open a secured credit card. Opening new accounts may lower your credit initially, but will start improving your credit after 3 or so months.
Collections: Did you know that paying off or settling a collection can and will drop your credit scores? There is a better way to take care of your collections and actually have it improve your scores. Don't hesitate to call us for help with this.
Loans vs. Revolving Credit: I have been told from many credit vendors that the best way to achieve the maximum credit score is to have 3 revolving tradelines (visa, dept. store, etc.) for every installment loan (mortgage, line of credit, car payment, student loan, etc.). You don't want to have 1 car payment and 25 credit cards!
Balances: While you want to have somewhere between a 0 and 20% balance compared to your limit, you will want to make sure you still use your credit cards on occasion. If you don't owe anything, buy lunch occasionally on the card and then pay it off when you get home.
Inquiries: Many people ask me that if we pull their credit, will their credit scores come down? This depends. If you don't have your credit pulled often, no it won't. If you have your credit pulled every week, it will. Feel free to call us with specifics on your credit inquiries and we will let you know.
If you want to buy a home in the next few months, it may be a good idea to start working on your credit. We are here to help you. We have quite a few ways to help you improve your scores in as little as 7 days in some cases. Don't hesitate to call us with any and all credit and loan scenario's! Call us anytime at (888) 416-0920. We can pre-approve you in a 5 to 10 minutes phone conversation!