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How to Improve Your Credit Score


If you’re even considering purchasing a home, you should be paying attention to your credit history. When was the last time you checked your FICO score? It’s a good idea to check your score at least annually to see what your score is and if there’s anything incorrectly reported that could be counted against you. “Acceptable” scores for mortgage loans vary by lender and loan type, but you’re going to want to aim for at least a score of 620 for a VA Loan (some will approve between 580-620, but again, it varies).

If your score is less than ideal, there are steps you can take to get back in good standing.

1. Know your credit score. You do not want to be surprised by this, or worse yet have your heart set on a home that you can’t get approved for. Scores range from 300-850, and by law you can also obtain a free credit report once a year to review it for errors (it happens!) and do a checkup on your standing. Head over to AnnualCreditReport.com once a year to review reports from the top three credit reporting agencies: Equifax, Experian, and TransUnion. Review this information carefully and be sure to work to correct any errors on your report.

2. Pay down credit cards and keep the balances low. One big factor in your credit score is the balances you keep on your credit cards. If you’re close to your max on credit cards, that means you have little available credit, but the lower the balances are the more “room” you have to borrow. Lenders use your debt-to-income ratio when determining how much they can lend you; therefore, the more debt you’re carrying will adversely affect that ratio. So try to pay those balances down!

3. Pay your bills on time.This may be one of the most important things you can do. Late payments or delinquencies can have a huge effect on your FICO score. One way you can avoid this pitfall is by setting up automatic electronic payments for your bills.

4. Be on alert for scams. You’re guaranteed to come across debt consolidation and credit repair services while Googling “credit repair” online—just be wary of scams! One fantastic resource that military service members have at their disposal is Military OneSource. They offer confidential financial counseling that can help you dig out of your situation and set yourself on a path toward a healthy credit score and more options for home ownership!

It’s key to understand your credit in order to assess accurately what your prospects for home ownership are. If you’re patient, prudent, and focused, you can work toward repairing your score and save money by securing lower interest rates. It’s worth the effort!

Heidi Robbins, Realtor®   ~ Military Relocation Professional.

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