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Planning to buy a house? Here’s 4 ways to improve your credit score

CREDIT SCORE CONCEPT

In today’s hot real estate market, it’s more important than ever to be on solid financial footing before buying a house. This is especially critical when you have to participate in a bidding war where you have to put up a strong offer and stand out amid a throng of buyers.

One of the first steps in setting your financial house in order is reviewing and improving your credit score. Excellent creditworthiness allows you better flexibility in choosing a home and gives you an edge over the competition.

Below are some tips on how to improve your credit score.

Simplify

Raising your credit score is no easy feat but taking small steps at a time can go a long way toward achieving your goals. Start by simplifying your credit card use.

Is juggling three to five credit cards something you can currently relate to? Kudos to you if you’re managing it quite well. However, if it’s getting a bit hard to track your expenses for each card, you may need to whittle it down to one or two cards to avoid hurting your credit score.

A 2019 consumer study found that the average American has four credit cards. But while that is normal for some, it can be too many for others. When you feel like you’re struggling to keep up with your credit card statements and bills, that’s usually a sure-fire sign that you should simplify.

Mind your credit utilization

Banks often get uncomfortable when they see consistently high credit utilization rates. Say you have a $10,000 credit limit on your card and you often use up anywhere between $5,000 and $7,000. Your credit score might take a serious hit as a result.

A credit utilization rate that hovers from 10% to 30% is generally the sweet spot you should aim for. The ones with the best credit scores usually stay within 10% and rarely breach that range.

Check your credit statements

Nowadays, it’s easy to check your transactions on-demand through bank mobile apps. But don’t neglect to double check credit statements that your bank sends to you every month. Examine it line by line to make sure there aren’t any unusual transactions.

Instances of credit card fraud may be hiding in plain sight. Cyber criminals who gain access to your card info usually make small and seemingly insignificant purchases to test if a transaction will come through. Watch out for charges that you can’t trace and notify your bank immediately.

Become an authorized user for someone else’s card

If a family member or someone you trust is open to granting you authorized user status for their credit card, you can benefit from any positives that go toward their payment history and credit utilization.

The main owner of the credit card is still responsible for paying off dues on the account, so make sure to ask someone who has an impeccable payment history over a long period of time. If they agree, they can ask their bank to send them a new card with your name on it.

But the best part about it is that you never even have to use that card. Simply being listed as an authorized user is enough to get your credit score a boost.

Are you in the market for a home in one of La Cañada Flintridge’s picturesque communities? Allow me, Kathy Seuylemezian, to guide you in your home search. Feel free to call me at 818.949.5205 or send an email to Kathy(at)imuragent(dotted)com.