Tips for Improving your Credit Score!

April 10, 2020

Post by: Nathan Gillin

  1. Check the accuracy of your credit reports
  • Know your credit history. What past credit decisions are impacting your score?
  • 3 major credit bureaus: Experian, Equifax and TransUnion. Each has its own credit report and score for you based on your credit history (i.e. Everyone actually has three credit scores).
  • Mistakes are not unusual, and it is good to check regularly.
    • If you find an error, it is important that you file a separate dispute with each of the 3 major bureaus. Each error must also be filed individually.
  • The key is to find out why the score is good or bad.
  1. Find exactly what you need to improve

Major credit score factors include:

  • 35% Payment history (i.e. paying on time)
  • 30% Amount of debt
  • 15% Account ages/How long you’ve been borrowing and building credit
  • 10% History of credit applications (i.e. too many applications makes you look desperate) 
  • 10% Account Mix: Lenders want to see you using both revolving and installment credit
    • Credit cards (Revolving)
    • Mortgage (Installment) 
    • Student loans (Installment)
    • Car payment (Installment)
  1. Avoid exorbitant debts by paying on time
  • Deadlines are there for a reason
  • Meeting deadlines equates to zero interest
  • Setting up payment reminders is a great way to stay on track
    • Set your due dates to when works best for you
  1. Only open new credit accounts when absolutely necessary
  • Opening and/or closing too many accounts in a short period of time can affect your score in a negative way
    • This shortens the length of your credit history, something that you want to be as long as possible
  • Raises your credit-utilization ratio (Earnings:Expenses)

For any questions or concerns that you may have, the team at CHM Lending is here to help you through every step of the way!