A low credit rating can menace your family’s financial stability. Not only can it prevent you from being approved for loans, but it could also cost you thousands in extra interest rates and fees. Fortunately, there are steps you can take to identify problems and boost your credit score.
Find Your Credit Score
Your credit score, known as FICO, can be anywhere from 300-850. Your goal should be to see at least 670 or above. If you hope to get a low APR for a mortgage anytime soon, set your target for above 800, which is considered exceptional. You can get your credit score for free through a few sources, including Discover.
Get Your Credit Report(s)
Obtain your credit report from one of the three credit agencies: Experian, Equifax, or TransUnion. Reviewing all three will give you a more complete picture, but they should be similar. You can receive free credit reports once a year from annualcreditreport.com. Look for hits that could bring down your FICO score, such as late or missed payments, accounts turned over to collections, or simply using too much of the credit available to you.
Also, check your credit report for errors. Some of these can occur through no fault of your own and can be disputed. Mistakes range from an inaccurate recording of a late payment to completely false accounts, which may be a red flag for identity theft.
Practice Good Credit Hygiene
Next, work to improve your score by paying bills on time, catching up on payments you’ve missed, and lowering balances. Remember that if you close an account, your overall score will likely go down for a couple months as the utilization of your available credit increases.
If you feel overwhelmed, seek out a credit counselor for help. It takes patience and discipline, but improving a poor credit score can be worth the effort.
If you’re trying to boost your credit score to buy a house, visit “What to Consider When Buying a Home” on the Midland National blog.