Buying a house is something that most people desire, and with current low-interest rates a good time to buy is now. When a person buys a home, or finances any large item, their credit report plays a huge role in determining if a person qualifies for a loan. This is why maintaining a good credit score is imperative. By following a few tips a person can not only keep up a good credit score, but can even raise it.
Keeping Revolving Accounts Current
One of the factors that determines a person’s credit score are negative accounts. Most often times these include 30,60, and 90 day late payments on revolving credit accounts such as Visa and MasterCard accounts. At the very least a person should make the monthly minimum payment to avoid negative marks. Consistent payments maintain and raise credit scores over time.
Another factor that determines a persons credit score are charged-offs and collection accounts. Charge-offs are usually the result of a person getting so far behind on a credit account it’s closed and charged-off by the bank. Collections accounts are usually the result of a medical bill or utility bill gone unpaid. Paying these off a person can raise their credit score, and possibly avoid a judgements through court action.
Secured Credit card
People with bad credit in the past may not qualify for a regular credit card. A secured credit card is a good option for people wanting a credit card to establish credit. The way a secured credit card works is simple. A person deposits a certain amount of money into a bank savings account, the minimum is usually 500 dollars. The bank then issues a Visa/MasterCard for a percentage of the savings account balance. The bank’s security in this financial arrangement is the savings account.
Bank Secured Loan
Another way to raise a credit score is through an account secured loan. This works like a secured credit card; however, a credit card isn’t issued. A person getting this type of loan goes into their financial institution and fills out a regular loan application. The person getting a loan deposits a certain amount of money into a CD or savings account. The bank then loans that amount, sometimes slighty less, back to the person. The term for this type of loans is typically 6-12 months. At the time the last payment is paid a person’s credit report will show a paid off loan. If a person makes timely payments on the loan their credit score will increase.
Another little known way to build up a credit score is by having bills not normally reported to credit bureaus get reported. There is sometimes a small fee charged by a credit bureau for this service. In this scenario a person gets an account like” buy here pay” here transactions reported to the bureau. A person can even get their rents payments reported.
Maintaining and increasing a credit score is not as hard as people believe. With a little time and patience everybody can increase their credit score to varying degrees.