Some of you are on top of this and the topic does not scare you. The majority though cringe at the thought of looking at their credit score. The good news though is there are ways to keep track of it & ways to improve it.
The first thing I want to say is that I am not a financial advisor, an accountant, a banker, a lawyer, nor a lender. This article is based on my personal experience and some of the things that I did that helped improve my credit score. The rests are other methods you can also use. Your personal financial situation will more than likely differ from mine but hopefully you will find some bit size tidbits you can take away & find helpful. If you can apply some of these principles through the follow months even up to a year you will be putting yourself in a better position for a mortgage pre-approval when it’s time to buy a home. Your future you will thank you!!
The first thing to do is view your credit score and pull your credit report. You more than likely have credit cards in your wallet that give you access to your credit score either through their website or through their app. Or you can download Credit Karma and they will give you your credit score from two different credit reporters. When you click-through the different functions of the Credit Karma app it shows you different things like all your lines of credit, the percentage use between your credit limits and how much of it you have used, your oldest lines of credit, the number of inquiries you’ve had in the past 2 years and a lot of other things.You can also contact the 3 credit reporting agencies directly. They are Equifax, Experian, and TransUnion.
Use this information to start tracking your credit score. If you are making serious efforts, focused on making timely payments, and significantly paying down lines of credit you will see changes in your score between every 7 to 90 days. I do not mean that you will see changes in 7 days, what I mean is that after a few weeks/months pass your score for example 640 one day and 7 days from then it could go up or down. Up, obviously if you are diligently working on your score or down if you are neglecting to work on your score. This is what to focus on until your credit report comes in. When it does, go over it review it and see if there are an discrepancies. There will be instructions on your report on how to dispute any discrepancies or you can hire a lawyer to do this for you.
The plan is to pay your smallest balances off first because it is easier to see progress. Pay the minimum payments on all your cards on time but throw the extra money you have on the card with the lowest balance. “What extra money?” you ask. If you look at your bank account and go through your transactions you will notice that a lot of your money goes towards wants and not needs. Get a piece of paper and a calculator and figure out how much a week you spend on a $5 cup of coffee, eating out, and entertainment. Times those numbers by 4 or 5 for each week of the month and I am almost positive you just found a few extra hundred dollars you can use towards your debt. If you want to take it to the extreme figure out what you might be spending on vices like tobacco products or alcohol a week, times that by 4 or 5. You might have found another hundred dollars. When you can pay off a balance from one card the money you were once using to pay that card can now go towards the next lowest balance along with the extra money we just found. A friend of mine taught me this trick, she calls it the snowball effect. You just start knocking the cards out with the extra money from previously paid off balances. The key is to leave that card clean with zero balance. DO NOT CLOSE THE ACCOUNT ONCE YOU PAY IT OFF! This negatively affects your credit score.
Getting a second, or third, or night job for a few months helps tremendously but only if you are going to allocate all the money from that employment to your debt. I say only a few months because then you’ll end up sleep deprived for a long time and I can’t imagine that’s healthy but financial stress is not healthy either.
Going through your belongings and seeing if you have anything of value that you do not use anymore and hold a garage sale. If you have not used it in a year you do not need it anymore. Another upcoming blog post will be about decluttering and this is a key tidbit. If you don’t use it, lose it.
These are only a few tips but worked diligently you will see an improvement in your score within a few months. Don’t let your finances be intimidating. Take control over them and be the leader of your own financial destiny. Credit score is one of the many things lenders look at to pre approve you for a mortgage. Working on this now will help you in the long run. Like I previously said, your future you will Thank you. Look for future post on other documents you will need to successfully get through the pre approval process. My goal is to put you on a successful preplanned path to home ownership. Please feel free to get in contact with me if you have any additional questions about this topic or any other topic that puts you in your next home. If you are ready to talk to a lender I would be more than happy to recommend one.
On Another Note
If you are curious about the market or you want to see what is available please click this link. It will take you straight to my personal ReMax Results website and allow you to browse. When it ask you to fill out the form I am the only one that sees your information. It does not go to a ReMax database. I will be the only one contacting you.