CreditScores

8 Ways to Improve Your Credit

Credit scores, along with your overall income and debt, are a big factor in determining
if you’ll qualify for a loan and what loan terms you’ll be able to qualify for.

1.        Check for and correct errors in your credit report. Mistakes happen, and you
could be paying for someone else’s poor financial management.

2.        Pay down credit card bills. If possible, pay off the entire balance every month.
However, transferring credit card debt from one card to another could lower your score.

3.        Don’t charge your credit cards to the maximum limit.

4.        Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized
less for problems after a year.

5.        Don’t purchase big-ticket items for your new home on credit cards until after the
loan is approved. The amounts will add to your debt.

6.        Don’t open new credit card accounts before applying for a mortgage. Having
too much available credit can lower your score.

7.        Shop for mortgage rates all at once. Too many credit applications can lower
your score, but multiple inquiries from the same type of lender are counted as one
inquiry if submitted over a short period of time.

8.        Avoid finance companies. Even if you pay the loan on time, the interest is high
and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with
permission of the Fannie Mae Foundation. To obtain a complete copy of the
publication, “Knowing and Understanding Your Credit,” visit http://www.
homebuyingguide.org.