Improve Your Credit Score

... and improve your mortgage interest rate. In today's market, mortgage loans are hard to get and the great interest rates are connected to your credit scores. I'm in the process of buying a condo and going through the loan process. Yeah, it's a hassle. Realtors should buy or sell a home every few years to remember what their clients go through.

Here are some suggestions to improve your credit score and make it easier to get a loan and a good rate:

Do:

• Pay your bills on time. Get current and stay current.
• Keep balances as low as possible on credit cards. Keep your credit balance under 30% of your credit limit. High debt hurts a credit score.
• Pay off debt instead of moving debt around. Keeping balances low, opening new credit accounts responsibly and paying on time will raise your credit score over time.
• Keep tract of your credit score. Order your credit score directly from a credit bureau and the inquiry will not hurt your credit score.
• Ask for a credit increase on your existing lines of credit if your debt is over 30% of your credit limit. This may lower your percentage of credit debt and increase your score. It only works if you manage your current debt responsibly and do not increase your debt.

Don't:

• Do not close unused credit cars as a strategy to raise your credit score and don't open new credit accounts just to increase available credit.
• Don't apply or open new credit accounts unless needed. Too many rapidly opened accounts will lower the average account age and have a negative impact on your score.
• Don't make any larger purchases prior to purchasing a home and don't even think about driving onto a car lot (where they sometimes run your credit scores).
• Don't think that paying off collection accounts or other derogatory items will remove them from your credit report. Closing an account will not remove it from your credit report.
• Inquires affect your credit score. Looking for new credit is associated with trying to obtain new debt and transalates to higher risk and lower credit scores. Only inquiries initiated by you over the most recent 12-month period are considered when determining your credit score, but, 24 months are reported on the your credit report. Auto and mortgage inquires are ignored if they occur over a 30 day period, called the "buffer" period.

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