5 Tips on Improving Your Credit Score Fast

In today’s world, a good credit score is extremely important. Whether you are looking to obtain a mortgage loan or simply apply for apartment tenancy, your credit score is almost always considered, and the decision between granting and denying credit often depends greatly on this number. If you are Hoping to obtain credit for anything in the near future and your credit score is less than perfect, here are some ways to boost your credit score fast.

1. Obtain a Copy of Your Credit Report

Legally, you are allowed to receive your credit report free of charge once every four months. It is always a good idea to obtain your credit report from all three agencies (Equifax, Experian, and Transunion), as there may be contradicting information on one or more reports. You can obtain your report online, and you can also contact the companies in writing. Once you have your up to date reports, you can carefully analyze your scores and get started on boosting your scores. It is important to note that if you do notice any errors or discrepancies, these can easily be fixed by contacting the credit reporting agency and reporting the issue.

2. Pay Your Bills on Time

Paying your monthly bills (gas, water, electric, home phone) on time will help to raise your credit score, and it will also reflect positively on your report. When a lender sees that you stay on top of your monthly obligations as well as keep a decent score, they will be more apt to approve your credit request. Additionally, keeping up with your monthly bills will help you stay away from the dreaded late charges that are typically tacked onto late utility and phone payments.

3. Apply for Additional Credit Cards

You can also boost your credit score by obtaining additional credit cards. It is important to note that you must pay the full balance on a monthly basis in order for your score to improve, and you can do this easily by making minimal purchases and paying them off either early or by the due date. If you are having trouble being approved for a credit card, a company like The Credit Geeks can help get your score back to a respectable level for you to be approved again.

4. Limit Your Credit Spending Limit

One way that a credit score is equated is by calculating the specific amount of credit used when compared to the total amount of credit available. A good rule of thumb is to only spend 30% or less of your available credit, as this shows the lenders and creditors that you are not maxing your card out every month.

5. Apply for a Secured Credit Card

If you are looking to build your credit fast and do not have the option of obtaining an unsecured credit card, you can always apply for a secured card. Keep in mind that by taking this route, your credit score won’t immediately skyrocket, but secured credit cards are a great way for individuals that have had credit issues in the past or individuals with little credit to build their score and start a good track record of making timely payments.

Boost Your Score, Become Eligible for More Credit

The truth of the matter is that a good credit score means a lot in today’s economy. Aside from obtaining loans and credit, your credit score may even be considered when applying for employment or leasing an apartment. By obtaining current copies of your credit report and working hard to fix any issues that are keeping your score down, eventually you will build up your score and become eligible for a variety of credit offers, allowing for a secure financial future.

What is a Good Credit Score to Buy a House in 2013?

Knowing what you credit sore is the greatest predictor on whether you’re going to be approved for a mortgage or not, so you might be wondering, what score do I need to get approved for a mortgage loan in 2013?

From the very start of the mortgage crisis back in 2007-08, many lenders have become more conservative in their lending guidelines.  Pre-mortgage crisis, you could get approved by your local bank or mortgage lender if your mortgage equaled 50% or less of your income and as little as if you had a social security number.

To get approved these days for a standard (conventional) mortgage, lenders are wanting to see the lower of your two credit scores, out of the three (Experian, Equifax, Transunion,) to be at least a 620 or above.  To be able to acquire the lowest interest rates, mortgage lenders are looking for credit scores in the 720 and higher range.  However, there are ways to get around having lower scores though such as government insured FHA and VA mortgage programs.

Your credit score isn’t the only requirement

Mortgage lenders also want for you to become invested in your home on day one. They want something else that ties you to the collateral more so than just your credit report – they want a healthy down payment. If you can come up with at least 20% of the purchase price of your home, you are able to meet this requirement. Some lenders do require less, but if you do find a lender that will accept less, then you are required to pay PMI (Private Mortgage Insurance.)

PMI is insurance that you pay monthly installments on and is included in your monthly mortgage payment to protect the lender in case of default. It’s estimated annually at .5% of the amount borrowed and then dived by 12 to be included within your mortgage payment.  Once you have built up at least 20%, you no longer have to pay.

There used to be a way to get around having to pay PMI and not coming up with the full 20% and perhaps nothing down at all. It was known as a piggyback mortgage, which for example was essentially two mortgage loans taken out at the same time with the smaller second loan was meant to fund the first loans’ down payment. These were also often called 80/20’s or 80/15’s, which ever percentage the second loan was. These loan products, also known as lines of credit, are pretty much extinct to people that do not have excellent credit.

Don’t forget about your debt to income ratio

So what does DTI mean? Debt to income ratio is the percentage of your debts compared to your income.  For example, let’s say that you have a car payment of $200, credit card payment in the amount of $25, rent and utilities in the amount of $500, and your income is $3,000. Once calculated, this would mean that you have a DTI income ratio 25% debt to income ratio, which is healthy and acceptable in the eyes of mortgage lenders.

The debt to income ratio requirement for conventional mortgage lenders is no greater than 28%. Let’s take a look back at pre-mortgage crisis real quick. Now the logic behind 28% makes a lot of sense, doesn’t it? Before the mortgage crisis, you could have your debt to income ratio as high as 50%! Are you starting to see a trend here?